Year of Grönsamhet 2022

Year of Grönsamhet 2022 Setra Group Sustainability Report 1

Setra Group Sustainability Report 2022

Introduction

Introduction............................... 2 This is Setra................................. 3 Setra 2022................................... 4 CEO’s comments......................... 5

Setra’s sustainability work...... 6 We create green value................ 7 External factors........................... 8 Setra’s value chain...................... 10 Our sustainability goals............... 11

Sustainability work

Our contribution to the UN SDGs..................................... 12 Our key sustainability areas........ 13 Our portfolio................................ 14 Climate-smart raw material........ 17 Resource-efficient business....... 21 Safety, culture and colleagues... 25 Sustainable transport.................. 30 Climate report.............................. 33

Executive Management........... 38

GRI content index

Board of Directors.................... 39 Governance of Setra’s sustainability work.................... 40 Sustainability risks................... 43 GRI content index..................... 45 Contact details.......................... 47

Contact details

Setra Group’s sustainability report for the 2022 financial year has been reviewed in summary form. The audited annual report can be found in Swedish at setragroup.com. Figures in brackets refer to outcomes from the previous year.

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Setra Group Sustainability Report 2022

This is Setra.................................... 3 Setra 2022...................................... 4 CEO’s comments........................... 5

Setra’s sustainability work...... 6 Executive Management............ 38 Board of Directors...................... 39

Sustainability risks.................... 43 GRI content index...................... 45 Contact details............................ 47

Setra is one of the largest wood industry companies in Sweden. We process raw material from responsibly managed forests and offer climate-friendly products for construction, housing, the paper and pulp industry and energy production.

Our markets

Our production units

transition to a bioeconomy. Running as a common thread throughout the business, our sustainability work is set to accelerate as we pursue our goal of climate neutrality by 2030.

Setra’s culture is defined by our core values – commitment, innovation and responsibility.

Our Head Office is located in Solna, Sweden, while our customer service and logistics departments are based in Gävle. The Group comprises seven sawmills and two wood processing units, one of which is located in the UK. We also have sales offices in the UK, Poland, Spain, Tunisia, Japan and China. Setra employs approximately 850 people and in 2022 generated sales of around SEK 6.4 billion. Setra’s main owners are Sveaskog and Mellanskog.

Production Average no. m3 of employees 2022 Malå*

Skinnskatteberg

Kastet Nyby Heby

Hasselfors*

USA

North Africa & Middle East

74

Skinnskatteberg

249,000

74

Nyby

205,000

73

Malå*

147,000

77

Asia & Australia

21%

Hasselfors*

357,000

105

Heby

286,000

95

Färila

216,000

77

● PROCESSED WOOD PRODUCTS

Långshyttan

73,000

144

Setra Wood Products (UK)

21,000

47

* Also includes processed goods.

12%

3

Contact details

29%

262,000

● SPRUCE SAWMILLS

30%

Rest of Europe

Kastet

Färila

Sweden Långshyttan

8%

● PINE SAWMILLS

GRI content index

Wood as a building material for residential, municipal and commercial buildings is strongly on the rise, helping to reduce the climate impact of the construction industry. Wood binds carbon throughout its lifetime, when the trees are growing and then in the form of wood products. We manufacture construction products such as components, glulam and cross-laminated timber at the high-tech wood industry hub in Långshyttan, where we also develop new products and solutions to meet our customers’ needs. In Hasselfors, we produce strength-graded, planed construction timber on the world’s most modern trimming and planing line. Our customers are global and our wood products are a key part of the

Sustainability work

Governance of Setra’s sustainability work..................... 40

This is Setra

Introduction

Introduction.................................. 2

Setra Group Sustainability Report 2022

This is Setra.................................... 3 Setra 2022...................................... 4

Setra 2022

Introduction

Introduction.................................. 2

CEO’s comments........................... 5

1.4

Setra’s sustainability work...... 6 Executive Management............ 38 Board of Directors...................... 39

Sustainability risks.................... 43 GRI content index...................... 45 Contact details............................ 47

Sustainable building projects

Read more in the Climate report on page 33.

Roadmap for climate neutrality

Housing, schools, shops, workplaces – and a church.

Setra’s building solutions in CLT and glulam are forming the backbone of more and more building projects, both in Sweden and Norway.

2022 has seen us launch a detailed roadmap for making Setra climate neutral by 2030. We have also begun investigating what we need to do to make our production fossil free. The dialogue with our partners has become closer and stronger and we are working together with the green transition.

Strong result This year’s operating profit of SEK 1.2 billion is the second highest in Setra’s history. The year began with record high demand for wood products, before economic activity slowed in the second half of the year.

Net sales by business

(SEKm)

4,215

Net sales by business (SEKm)

Read more in the CEO’s comments on page 5.

Green investments

1,507 741

Sawn

Read more in Safety, culture and colleagues on page 25.

Direct economic value generated and distributed (SEKm) Customers

2022

Sales of wood products, bioproducts and building systems 6,406

Suppliers, raw material Purchases of wood raw material

-2,365

Suppliers, transport

Transport costs

-872

Suppliers, other

Purchases of other goods and services plus depreciation

Employees

Salaries and social security costs

Lenders

Interest

-6

State

Taxes

-248

-1,396 -567

Net profit/loss

952

Shareholders

476

Board’s proposed dividend

Contact details

We have continued to invest in new technology that makes basic production more efficient and increases the value-added processing of Setra’s products. During the year, decisions were also taken on new investments in a pellet factory and our first solar panels.

In 2022, we have worked jointly across Setra to further increase the focus on safety.

Despite three serious accidents towards the end of the year, we have seen a significant reduction in serious accidents overall.

Work is now continuing with the same vigour to maintain the trend in 2023.

GRI content index

Read more in the Climate report on page 33.

Focus on safe workplaces

Sustainability work

Governance of Setra’s sustainability work..................... 40

million tonnes

That’s how much carbon dioxide is locked up in this year’s output of wood products – and will remain locked up throughout the products’ life cycle.

Processed Bioproducts 4

Setra Group Sustainability Report 2022

This is Setra.................................... 3 Setra 2022...................................... 4 CEO’s comments........................... 5

Setra’s sustainability work...... 6 Executive Management............ 38 Board of Directors...................... 39

Sustainability risks.................... 43 GRI content index...................... 45 Contact details............................ 47

2022 began with strong market development for Setra and ended with significantly weakened margins.

Despite this considerable fluctuation, the full-year result remains our second best ever.

Setra’s goal is to achieve climate neutrality by 2030. Linked to this goal is our vision of

“The green transition taking place in wider society is focused on replacing fossil raw materials with renewable ones. This is the basis of Setra’s entire business, since we provide climate-smart wood products and bio­ products.”

Strategic investments Step by step, we are realising our strategic investments and moving forward with new ones. In 2022, we continued the modernisation of our saw lines, built a new dryer in Heby and invested in more energy-efficient control systems for drying at all sawmills. We have also decided to build a pellet factory in Långshyttan. The aim is to process residual wood chips into industrial pellets alongside the Setra wood industry hub, starting in 2024.

Future outlook Several economic analyses in our industry indicate that wood consumption will increase in 2023. Despite the slowdown in construc-

tion in the second half of 2022, general interest in building with wood continues to grow, not least in Sweden, the rest of Europe, the US and Asia. In 2022, Setra signed contracts to supply cross-laminated timber and glulam for Electrolux’s new headquarters in Stockholm and for the Lumi office building that Vasakronan is developing in Uppsala.

In 2023, we look forward to advancing with new, climate-smart projects, and continuing our work on efficiencies in our basic production.

Katarina Levin, CEO Katarina Levin will step down as CEO at the AGM in May 2023. Setra’s new CEO Marcus Westdahl will take office during the year.

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Contact details

Progress with Grönsamhet

Grönsamhet – generating green value not just for ourselves but also our customers, society and nature.

The green transition taking place in wider society is focused on replacing fossil raw materials with renewable ones. This is the basis of Setra’s entire business, since we provide climate-smart wood products and bioproducts.

Our main carbon emissions are linked to transport and several of our sawmills are making important investments in new rail solutions. Our rail track extension in Skinnskatteberg, for example, was completed at the end of 2022.

Reducing emissions from transport is an important part of our roadmap for becoming climate neutral, and we are also focusing on the emissions from Setra’s own production.

In 2022, several feasibility studies were launched to explore the viability of making our units completely fossil free, and going from 96 percent green energy to 100 percent.

Green progress is also being made on energy. In 2022, for example, we decided to install solar panels on our large roofs in Kastet and at Setra Wood Products in Norfolk, UK. We are also proud to have a production system where even the residual products are of great benefit to society, not least in providing vital bioenergy. As a major supplier of raw materials to several of Sweden’s district heating plants, Setra’s sawdust is used to heat many Swedish homes.

GRI content index

2022 has been very much defined by the tragic war in Ukraine. Globally, we have also seen turbulence in logistics chains, steep electricity and diesel prices, and higher raw material and input costs. In addition, the business experienced after-effects of the pandemic. Setra had its highest COVID-19related absences at the beginning of the year, but operations continued thanks to the great dedication of our employees. Many of the operators quickly upgraded their skills and flexibility between departments increased.

Accidents leading to sick leave have been greatly reduced thanks to targeted efforts, but regrettably there were still three serious accidents in the autumn.

We entered 2022 knowing that 2021 was an exceptional year for Setra, with our highest ever operating profit. The first half of 2022 continued in this spirit, with excellent prices and good sales. However, a global economic downturn began in the third quarter and accelerated in the final months of the year.

Thanks to the year’s strong start, however, we are still able to present figures that are only surpassed by 2021. The Setra Group’s operating profit for 2022 amounted to SEK 1,206 million, compared with SEK 1,588 million in 2021. Net sales were SEK 6,364 million, compared with SEK 5,841 million in 2021.

Sustainability work

Governance of Setra’s sustainability work..................... 40

Focus on renewables

Introduction

Introduction.................................. 2

Setra Group Sustainability Report 2022

Introduction

Introduction.................................. 2 Setra’s sustainability work...... 6 We create green value.................. 7 External factors.............................. 8 Setra’s value chain........................ 10 Our sustainability goals................ 11 Our contribution to the UN SDGs......................................... 12

Sustainability work

Our key sustainability areas........ 13 Our portfolio................................... 14 Climate-smart raw material......... 17 Resource-efficient business....... 21 Safety, culture and colleagues... 25 Sustainable transport................... 30 Climate report................................ 33

Setra’s sustainability work

Executive Management............ 38 Board of Directors...................... 39

GRI content index

Governance of Setra’s sustainability work..................... 40 Sustainability risks..................... 43 GRI content index...................... 45 Contact details............................ 47

Contact details

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Setra Group Sustainability Report 2022

Setra’s sustainability work...... 6 We create green value.................. 7

We create green value

Our sustainability goals................ 11

Sustainability work at Setra is about taking responsibility for the effect we have on people, society and the environment along our entire value chain. We endeavour to make all our operations green, in line with Setra’s vision of a business where everyone prospers – not just ourselves but also our customers, society and nature.

Our contribution to the UN SDGs......................................... 12

Starting points for sustainability work

External factors.............................. 8 Setra’s value chain........................ 10

Our portfolio................................... 14 Climate-smart raw material......... 17 Resource-efficient business....... 21 Safety, culture and colleagues... 25 Sustainable transport................... 30 Climate report................................ 33

Executive Management............ 38 Board of Directors...................... 39

Sustainability risks..................... 43 GRI content index...................... 45 Contact details............................ 47

Our key sustainability areas

Climate Neutral Setra 2030 The climate crisis is one of humanity’s biggest challenges and we have a responsibility to contribute solutions and reduce our climate impact. Setra has therefore adopted a goal of becoming climate neutral by 2030.

This objective applies to the entire value chain, with the exception of international transport, and involves taking emissions from operations to a net sum of zero. Read about our work on a roadmap for climate neutrality on page 35 and about our other sustainability goals on page 11.

The work on a climate-neutral Setra also contributes to our overall goal for 2025, which is to be one of the leading wood products companies in Europe and the one with the strongest sustainability profile. We also manage our sustainability work so that it contributes to the 2030 Agenda. Read more on page 12.

OUR VISION OF GRÖNSAMHET

We want to do business where everyone prospers – not just ourselves but also our customers, society and nature. That is what we call Grönsamhet. It comes down to creating green value. The vision is based on five principles that are firmly rooted in our core values.

Our efforts to generate green value permeate the entire Setra organisation, and the results are reflected in our decisions, the way we operate and how we set our targets.

We are not there yet, but we are well on our way.

Contact details

Setra’s sustainability work focuses on the areas where we have the greatest influence and potential to make a difference. In our materiality analyses, we balance our stakeholders’ values with the actual impact of our operations, as well as external factors and risks. The key areas include both aspects related to our own operations, such as resource-efficient production and occupational health and safety, and areas

that we can influence indirectly, such as climate-smart raw materials and transport.

Read more about our key sustainability areas on page 13.

GRI content index

Governance of Setra’s sustainability work..................... 40

We take account of financial, social and environmental perspectives as we run and develop our business. The starting focus is on reducing any negative impacts and increasing the positive effects along our entire value chain – from the extraction of the raw material in the forest until our wood products and bioproducts reach the customers.

All work at Setra is informed by our sustainability policy, which describes how we should behave both in our daily work and as a company. We are a values-based organisation, where commitment, innovation and responsibility are key concepts. This also means that sustainability is everyone’s business at Setra – every employee is responsible for contributing within the scope of their duties.

The sustainability policy can be read at setragroup.com.

Sustainability work

Our key sustainability areas........ 13

Introduction

Introduction.................................. 2

Read more about the vision and our milestones on the path to Grönsamhet at setragroup.com.

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Setra Group Sustainability Report 2022

Setra’s sustainability work...... 6 We create green value.................. 7 External factors.............................. 8 Setra’s value chain........................ 10 Our sustainability goals................ 11 Our contribution to the UN SDGs......................................... 12

External factors

Introduction

Introduction.................................. 2

2022 was a dramatic year, with Russia’s invasion of Ukraine causing political instability and an energy crisis. There are also many indications that we are entering a new economic downturn. At the same time, society has emerged from the coronavirus pandemic and several positive changes can be seen in the world around us. This section describes some of the key external factors that are affecting Setra’s business, operations and sustainability work.

Accounting for about a third of Sweden’s energy supply, bioenergy is mainly used in industry and the district heating sector, followed by the transport and electricity generation sectors. In all these cases, it replaces fossil fuels. Unfortunately, there are moves to reduce the use of bioenergy.

The European Commission’s draft revision of the Renewable Energy Directive proposes that logging residues, branches and tops should not be counted as sustainable fuels for energy production. Another example is the reduction obligation, the blending of biofuels in petrol and diesel, which has been put on hold by the new Swedish government. Both these initiatives risk reducing the use of fossil-free bio­energy. At the same time, there are strong arguments in favour of replacing fossil-based raw materials and processes with renewable alternatives.

Climate-smart raw material......... 17 Resource-efficient business....... 21 Safety, culture and colleagues... 25 Sustainable transport................... 30 Climate report................................ 33

Executive Management............ 38 Board of Directors...................... 39 Governance of Setra’s sustainability work..................... 40 Sustainability risks..................... 43 GRI content index...................... 45 Contact details............................ 47

‘Paris Agreement’ for biodiversity For Sweden, this involves increasing the focus on preserving forests of high conservation value and using forestry methods that promote biodiversity to an even greater extent. Rich biodiversity and thriving ecosystems are essential for life on our planet and our ability to cope with future climate change.

Economic slowdown The global economy is slowing down. In the autumn of 2022, we saw the global wood products market weaken, leading to oversupply and falling prices. However, thanks to increased demand from the US market, Swedish exports have not been affected to any great extent. In the longer term, the assessment is that global demand will grow due to high demand for renewable and climate-smart building materials.

Contact details

At the UN summit in Montreal in midDecember 2022, governments from around the world decided on a global framework for biodiversity, a ‘Paris Agreement’ for nature.

The agreement sets targets for the world to protect 30 percent of all land and sea areas and restore 30 percent of all degraded ecosystems by 2030.

GRI content index

Bioenergy under the spotlight

Our portfolio................................... 14

Sustainability work

Our key sustainability areas........ 13

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Setra Group Sustainability Report 2022

Introduction

Introduction.................................. 2 Setra’s sustainability work...... 6 We create green value.................. 7 External factors.............................. 8 Setra’s value chain........................ 10 Our contribution to the UN SDGs......................................... 12 Our key sustainability areas........ 13 Our portfolio................................... 14 Climate-smart raw material......... 17 Resource-efficient business....... 21 Safety, culture and colleagues... 25 Sustainable transport................... 30 Climate report................................ 33

Executive Management............ 38 Board of Directors...................... 39

Sustainability risks..................... 43 GRI content index...................... 45 Contact details............................ 47

Less construction but more apartment blocks in wood for the construction sector to reduce its greenhouse gas emissions, studies show that industrial wood construction has many benefits beyond those for the climate. It increases productivity during the build, causing less disruption to the local area.

The working environment on the construction site is dry, clean and quiet, and living in wooden homes offers health benefits.

In addition, industrial wood construction helps to create new jobs in rural areas.

The Green House Gas Protocol is an international calculation and reporting standard for organisations wishing to report their greenhouse gas emissions. Setra has reported its greenhouse gas emissions according to the GHG Protocol since 2015. Now, new guidance is under development, introducing additions to the protocol to address activities that are land-intensive in their value chain. Since forestry is considered a land-intensive activity, Setra’s future climate reports will be affected. The guidance will include the emissions and absorption of carbon dioxide resulting from land use changes and from carbon sequestration in biogenic products, including wood products. The new GHG guidance will be published in 2023 and aims to help achieve the objectives of the Paris Agreement.

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Contact details

In 2022, the number of newly built homes fell by just over 15 percent compared with the previous year and the Swedish National Board of Housing, Building and Planning’s forecast is that housing construction in Sweden will continue to decline in 2023.

However, the number of apartments in multi-dwelling blocks with timber frames has increased almost every year for the past decade. Today, about one in five newly built apartment blocks are made of wood.

While building in wood is an important way

New guidance on climate calculations

GRI content index

Governance of Setra’s sustainability work..................... 40

The EU Taxonomy is part of the Green Deal, the EU’s strategy to achieve climate neutrality by 2050. The taxonomy contains rules on what can be considered an environmentally sustainable economic activity and sets requirements for sustainability reporting by companies. The aim is to make it easier for investors to identify sustainable investments that contribute towards the EU’s primary environmental objectives, such as mitigating climate change, transitioning to a circular economy or promoting biodiversity. The detailed regulatory framework has not yet been decided, including what types of forestry are considered sustainable. This is a vital issue for the Swedish forest industry.

For Setra, the new reporting requirements will enter into force at the turn of the year 2024/2025.

Sustainability work

EU Taxonomy sets new reporting requirements

Our sustainability goals................ 11

Setra Group Sustainability Report 2022

Setra’s sustainability work...... 6 We create green value.................. 7 External factors.............................. 8 Setra’s value chain........................ 10

Setra’s value chain Our core business is processing wood and our value chain extends all the way from the forest out into society. Here, our climate-smart wood products contribute to sustainable construction and our bioproducts are used for pulp and for bioenergy, in the form of heat and renewable fuels.

Introduction

Introduction.................................. 2

Our sustainability goals................ 11 Our contribution to the UN SDGs......................................... 12

Sawn wood products

4

Our portfolio................................... 14 Climate-smart raw material......... 17

2

Processed wood products

Sustainability work

Our key sustainability areas........ 13

Sawmills

1 3

Resource-efficient business....... 21 Raw material

Safety, culture and colleagues... 25

3

Sustainable transport................... 30 Climate report................................ 33

Executive Management............ 38 Bioproducts

5

Board of Directors...................... 39 Bark

Sustainability risks..................... 43 GRI content index...................... 45 Contact details............................ 47

2. Purchasing

We buy all our timber from certified suppliers in Sweden who practice responsible forestry.

Setra holds FSC® and PEFC™ Chain of Custody certification.

Sustainable forestry, taking into account climate change and biodiversity, is a cornerstone of our value chain. We monitor forestry issues and develop together with forest owners and industry organisations. Timber transport is mainly powered by fossil fuels.

We are in active dialogue with our carriers to find more sustainable solutions.

We purchase large quantities of wood raw material and transport, which are managed by an efficient and structured organisation.

Other major purchases include energy, materials, chemicals and services. Our Code of Conduct for Suppliers is an important tool for trust-building and monitoring purposes. Setra has several foreign suppliers, which makes monitoring more challenging. We risk-assess our major suppliers and work to create close partnerships that involve checks and action plans to improve transparency and performance.

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Bio-oil

3. Inbound and outbound transport

4. P roduction and processing of wood products

5. Bioproducts/Resource efficiency

Mainly consists of transporting logs to the sawmills and products to customers by road, sea and rail. Transport is our biggest climate challenge as our wood products are distributed all over the world. We are working with our partners to find efficient and green logistics solutions, and we have extended rail tracks to several of our units.

Our core business comprises seven production units and two processing units. This is where our direct emissions occur, which gives us great scope to make a difference.

We are working actively on everything from energy efficiency to investments in renewable energy, resource efficiency and external environmental issues, with the ambition to accelerate our sustainability work in the coming years.

We use the whole log, nothing goes to waste. As much as possible becomes long-lasting wood products, while the rest becomes bioproducts for the pulp and paper industry, the energy sector and the production of renewable fuels. We also use bioproducts for our own heat production.

6. Customers/Society Setra’s customers are located all over the world. When our products are used in buildings, furniture and packaging, or for renewable energy, the value and climate benefit from the forest is relocated to society as a whole. The products continue to store the carbon from the forest and we help customers to reduce their climate footprint by replacing fossil fuels and energy with renewables. The products are also circular and can be turned into new products or bioenergy. We thus contribute to society’s bioeconomy.

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Contact details

1. Raw material

Wood Sawchips dust

GRI content index

Governance of Setra’s sustainability work..................... 40

Setra Group Sustainability Report 2022

Setra’s sustainability work...... 6 We create green value.................. 7 External factors.............................. 8 Setra’s value chain........................ 10

Our sustainability goals

Introduction

Introduction.................................. 2

Setra’s strategic objectives and our governance process are described on page 41.

Setra works to promote sustainable development on economic, social and ecological fronts.

Our goals are linked to Setra’s key sustainability areas and are a subset of our strategic objectives.

Our sustainability goals................ 11 Our contribution to the UN SDGs......................................... 12

1,680,000 m3

Capacity investments

Total processed volume 2028: 700,000 m3

350,000 m3

Production unit investments

Climate-smart raw material

Cost-effective and more environmentally friendly logistics

Higher volume by rail due to the new terminals in Hasselfors and Skinnskatteberg.

Continue to develop rail terminals and take part in the rollout of the BK4 road network.

Resourceefficient business

15% reduction in diesel consumption per m3 sawn timber in 2025, compared with 2010 (17.6 kWh/m3).

15.9 kWh/m3, down 2.5% on the previous year and 10.2% on 2010.

Feasibility studies on the viability of converting to renewables are ongoing. The target for 2023 is to reduce consumption by 2% compared with the previous year.

Energy efficiency of wood drying kilns

Coordinated knowledge exchange and activity planning has started.

Decision on and implementation of adaptive control of dryers, which is expected to have a major impact on electricity consumption.

Increased net revenue from bioproducts

Decision taken on pellet production, to begin in 2024.

Alternative means of transport and fuels, reducing transport kilometres and loads, and increasing value added.

Setra will be climate neutral by 2030, with the exception of foreign distribution

Business intelligence and a list of measures have been produced. The 2022 Climate report shows a remaining emission reduction amount of approx.

80,000 tonnes CO2 (excluding foreign distribution). A recalculation has been made in this year’s Climate report, for more information see GRI content index disclosure 2-4.

In 2022–2023, work is underway to develop a concrete action plan for climate neutrality, including business intelligence, a list of measures and a decision on interim targets and priorities. We are also working towards fossil-free production.

By 2025, Setra will reduce its total climate footprint (CO2 emissions) by at least 35% compared with the base year 2015

A reduction of 33,500 tonnes of carbon dioxide equates to a cut of around 14%.

The target for 2023 is to reduce the footprint by 5% compared with the previous year. Activities are based on the Roadmap for Climate Neutral Setra 2030 and our work towards fossil-free production.

Sustainable transport

More green and efficient transport solutions – rail projects and renewable fuels

New rail capacity from the sawmills in Hasselfors and Skinnskatteberg. Ongoing evaluation of transport route using liquid biogas.

Rail project at Heby completed in 2025. Continued close cooperation with carriers to find green logistics solutions.

Safety, culture and colleagues

LTAFR (LTA frequency): zero vision, interim target 2025 = 10, 2022 = 15. Safety index ((risk observations + near misses)/accidents), target = 10

LTAFR: 13.21 Safety index: 9.4

Focus on activities related to culture, leadership and behaviour, such as: increasing the number of risk observations, broader safety information, root cause analysis and leadership survey.

Organisational and social work environment (OSWE) index – aim is to constantly improve the index

70/100 (first measurement)

Our portfolio................................... 14 Climate-smart raw material......... 17 Resource-efficient business....... 21 Safety, culture and colleagues... 25 Sustainable transport................... 30 Climate report................................ 33

Executive Management............ 38 Board of Directors...................... 39 Governance of Setra’s sustainability work..................... 40

Climate report

Sustainability risks..................... 43 GRI content index...................... 45 Contact details............................ 47

*

Work ahead

Contact details

Total delivery volume 2028: 2,100,000 m3

Our portfolio

Trend

GRI content index

Outcome 2022

Sustainability work

Our key sustainability areas........ 13

Goal

Measurement 6 times/year with base year and month: November 2022.

After each survey, the team reviews the results and draws up an action plan to improve the situation.

* Measurements began in November 2022

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Setra Group Sustainability Report 2022

Setra’s sustainability work...... 6 We create green value.................. 7 External factors.............................. 8 Setra’s value chain........................ 10

Our contribution to the UN SDGs

Introduction

Introduction.................................. 2

We face some major shared challenges if we are to achieve environmentally, socially and socio-economically sustainable development – Setra supports the world’s joint 2030 Agenda for sustainable development and actively contributes towards achieving it.

Our sustainability goals................ 11 Our contribution to the UN SDGs......................................... 12 Our portfolio................................... 14 Climate-smart raw material......... 17 Resource-efficient business....... 21 Safety, culture and colleagues... 25 Sustainable transport................... 30 Climate report................................ 33

Executive Management............ 38 Board of Directors...................... 39

Sustainability risks..................... 43 GRI content index...................... 45 Contact details............................ 47

GRI content index

Governance of Setra’s sustainability work..................... 40

Adopted by world leaders in 2015, the 2030 Agenda is a framework that provides guidance on how we engage with the world around us. The agenda comprises 17 sustainable development goals and 169 targets that balance financial, social and environmental perspectives. To achieve the goals by 2030, everyone needs to contribute, including us as a business.

Setra supports the agenda in its entirety and, through our business, has both the responsibility and the capacity to make an active contribution to several of the goals. Our work to promote sustainable development of our business and operations involves creating positive value and taking full responsibility for the impact that our business has on individuals, society and the environment. The most important factor is the climate benefit of our products, but our responsibility along the whole value chain and as an employer, business partner and local community actor also comes into play.

Sustainability work

Our key sustainability areas........ 13

Our responsibility as a company

Integrated work

READ MORE ABOUT OUR CONTRIBUTION

Contact details

Our work on the global sustainable development goals (SDGs) is integrated into our work on Setra’s key sustainability issues. We have identified the goals and targets in the 2030 Agenda that are most important to Setra, and are developing our action plans in line with these. In focusing on the challenges we see in our key sustainability issues, we are also helping to solve the challenges outlined in the SDGs. Working towards climate neutrality is a particularly important part of our contribution.

An overview of the SDGs (and their targets) that are most relevant to Setra’s operations is available at setragroup.com.

It describes the challenges we have identified and our ability to make a positive contribution towards these SDGs.

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Setra Group Sustainability Report 2022

Setra’s sustainability work...... 6 We create green value.................. 7 External factors.............................. 8 Setra’s value chain........................ 10

Our key sustainability areas

Introduction

Introduction.................................. 2

Sustainability work at Setra focuses on the areas in which we have the greatest influence and potential to make a difference. This section describes our key sustainability areas and how the work is progressing. All the issues present both opportunities and challenges for us.

Our sustainability goals................ 11 Our contribution to the UN SDGs......................................... 12 Our portfolio................................... 14 Climate-smart raw material......... 17 Resource-efficient business....... 21 Safety, culture and colleagues... 25 Sustainable transport................... 30 Climate report................................ 33

Executive Management............ 38 Board of Directors...................... 39

Sustainability risks..................... 43 GRI content index...................... 45 Contact details............................ 47

Encouraging more construction in wood is our most important contribution to the climate. As well as being the only renewable building material, wood also stores carbon absorbed from the atmosphere. We work in a targeted way to increase the added value of our portfolio and contribute to the transformation of the construction industry, not least by offering cross-laminated timber and glulam building systems that enable large-scale and climate-efficient construction.

Bioproducts such as bark, wood chips and shavings from waste streams also play an important role in the climate transition, replacing fossil fuels and materials.

Climate-smart raw material Although Setra does not own any forest itself, it is in the forest that our business begins. It is extremely important for us and our customers that the raw material comes from sustainable forestry and is traceable. Through certification

by FSC® and PEFC™ and controlling against set criteria, we ensure that the timber used at our sawmills comes from legal logging that protects areas of high conservation value and bio­diversity. Our own production units also hold FSC and PEFC Chain of Custody certification.

Resource-efficient business

Making sure that our employees are not injured at work, and ensuring their well-being and development, is the most important factor for our success as a company. Safety is our top priority and we work hard to create a culture of safe behaviours, clear leadership and commitment, while also investing in modern and new technologies. Setra is a values-driven organisation where everyone is expected to contribute to our shared goals.

Sustainable transport Setra’s wood products have to be transported in order to reach our customers, and it is transport that accounts for the majority of our greenhouse gas emissions. We are working to connect more of our units to the rail network and helping to develop renewable fuels. Cutting emissions from transport is a challenge that we share with customers and suppliers. Many of the initiatives in this area are therefore based on collaboration with our carriers.

Climate report Our overall climate goal is for the whole business to be climate neutral by 2030, excluding foreign distribution.

Work is underway to draw up a tangible roadmap for climate neutrality and it will take both determination and effort from everyone at Setra to reach this destination. The Climate report helps us to monitor where emissions occur and how they change over time. In the report, we include all emissions from the planting of forest seedlings to the point when the goods reach the customer, i.e. our entire climate footprint.

Progress with Grönsamhet We want to be a business that also benefits our customers, society and nature – this green value is what we at Setra call Grönsamhet. The activities and advances towards our vision are then referred to as progress with Grönsamhet. For each sustainability issue in the report, our staff report on an achievement that we are particularly proud of.

Contact details

We work systematically to create efficient and circular flows. We almost exclusively use renewable energy and we focus on reducing our energy consumption. 100 percent of the wood raw material we buy in is put to good use, being processed into either wood products or bioproducts for pulp and paper manufacture and energy generation.

Safety, culture and colleagues

GRI content index

Governance of Setra’s sustainability work..................... 40

Our portfolio

Sustainability work

Our key sustainability areas........ 13

13

Setra Group Sustainability Report 2022

Setra’s sustainability work...... 6 We create green value.................. 7 External factors.............................. 8 Setra’s value chain........................ 10 Our sustainability goals................ 11

Our portfolio

Introduction

Introduction.................................. 2

Our climate-smart building materials and bioproducts play a role in the transition to a more sustainable society.

Our contribution to the UN SDGs......................................... 12

Sustainability work

Our key sustainability areas........ 13 Our portfolio................................... 14 Climate-smart raw material......... 17 Resource-efficient business....... 21 Safety, culture and colleagues... 25 Sustainable transport................... 30 Climate report................................ 33

Executive Management............ 38 Board of Directors...................... 39

Sustainability risks..................... 43 GRI content index...................... 45 Contact details............................ 47

“We want to help encourage more people to build in wood and we are always looking for good solutions to make things easier for our customers.

In 2022, Setra became the first business in Sweden to offer moisture protection on our frames made from cross-laminated timber. The selfadhesive protective sheeting is applied in the factory and keeps moisture out during the construction process. It has quickly become a popular solution as it offers con­struction companies both shorter construction times and lower costs com­pared with tenting solutions.”

Contact details

Olof Karlströms, Structural Engineer in Building Solutions

GRI content index

Governance of Setra’s sustainability work..................... 40

Moisture protection that simplifies construction

Read more about moisture protection at setragroup.com

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Setra Group Sustainability Report 2022

Setra’s sustainability work...... 6 We create green value.................. 7 External factors.............................. 8 Setra’s value chain........................ 10 Our sustainability goals................ 11 Our contribution to the UN SDGs......................................... 12 Our portfolio................................... 14 Climate-smart raw material......... 17 Resource-efficient business....... 21 Safety, culture and colleagues... 25 Sustainable transport................... 30 Climate report................................ 33

Executive Management............ 38 Board of Directors...................... 39

Sustainability risks..................... 43 GRI content index...................... 45 Contact details............................ 47

Governance Setra’s business concept shows how important a sustainable value chain is to the business. Our vision of Grönsamhet is founded on doing business where we, our customers, nature and society all benefit. It also characterises Setra’s sustainability policy, which describes how we should be working.

How we work A broad and sustainable range Setra aims to be a reliable partner that is responsive to customer needs and market developments. We endeavour to ensure that as much of each log as possible becomes long-lasting products used for building and construction, and we work strategically to increase the degree of processing in all product areas.

Sawn wood products Sawn wood products in pine and spruce account for most of Setra’s sales. The products are used both in construction and in items such as flooring, doors, furniture, fittings and packaging. Our biggest markets are Sweden, Europe, North Africa, the Middle East and Asia, with exports amounting to around 70 percent.

Processed wood products Processed wood products are a growing part of Setra’s product portfolio as they approach annual production of 500,000 cubic metres. About 60 percent of the goods are exported. The main products are planed construction timber, cross-laminated timber (CLT), glulam, and components for doors and windows.

responsibly managed forests, we create refined climate-smart products and solutions for construction, housing, pulp and paper manufacture and energy production. We thereby help our customers do better business in a global marketplace and are part of the solution in the transition to a bioeconomy.

BUILDINGS OF THE YEAR In 2022, two projects that we supplied received prestigious awards in industry magazine Byggindustrin’s Building of the Year competition. The winner in the Housing category was Cederhusen, the modern timber-built neighbourhood in Stockholm for which we supplied CLT frames. We also supplied glulam for the ICA supermarket in Sjöbo, which won the category Industry/ Logistics and Retail.

NEW PROJECTS New and exciting construction projects await in 2023. These include supplying CLT and glulam for Electrolux’s new headquarters in Stockholm and for the Lumi office building that Vasakronan is developing in Uppsala.

Contact details

OUR BUSINESS CONCEPT The future is built on wood. With a raw material that originates from

GRI content index

Governance of Setra’s sustainability work..................... 40

Increasing wood construction is a core issue for Setra. Wood is a renewable raw material that also stores carbon dioxide throughout its lifecycle. By manufacturing climate-smart products for the construction and wood industry, we and our customers are helping to shift the construction industry in a greener direction. We want to deliver solutions and services that make it simple to choose wood over other materials with a greater environmental impact. Demand for wood products is steadily increasing, which creates good growth opportunities both in Sweden and globally. Innovations and new technologies are increasing the amount of value added, not least to our by-products, which are vital raw materials for the pulp and paper industry and the energy sector. Our main challenge is to continuously improve our ability to deliver even more resource-efficient products with an even lower climate footprint, across our entire value chain.

The sustainability policy can be viewed at setragroup.com. Customer surveys are a valuable part of the stakeholder dialogue, with the results used to improve our offering.

Sustainability work

Our key sustainability areas........ 13

Our opportunities and challenges

Introduction

Introduction.................................. 2

15

Setra Group Sustainability Report 2022

Setra’s sustainability work...... 6 We create green value.................. 7 External factors.............................. 8 Setra’s value chain........................ 10 Our sustainability goals................ 11 Our contribution to the UN SDGs......................................... 12 Our portfolio................................... 14 Climate-smart raw material......... 17 Resource-efficient business....... 21 Safety, culture and colleagues... 25

Bioproducts We are careful to utilise the entire log – including the bark, chips and shavings. These residual streams are converted into bioproducts, including cellulose chips for the pulp and paper industry, and pellets and biofuels for cogeneration plants. Our biofuels have a sustainability certificate from the Swedish Energy Agency, which means they are classed as sustainable. Setra is a member of the Swedish Bioenergy Association (Svebio).

The war in Ukraine and the energy crisis in Europe have led to greater demand for bioenergy, including in Sweden. Sawdust from Setra helps to heat hundreds of thousands of Swedish homes, but it also

Sustainable transport................... 30 Climate report................................ 33

Executive Management............ 38

Where Setra’s products go (percentage of sales)

Board of Directors...................... 39

12%

23%

Bioproducts

We work strategically to further develop our products. In Hasselfors, we started planing construction timber in pine in 2022, as a complement to spruce. In Långshyttan in 2022, we inaugurated a new production line for glued components, mainly frames and casements for the window industry.

GRI content index...................... 45 Contact details............................ 47

65% Sawn wood products

Share of processed wood products

5% Wood components

65% Planed wood products

Share of bioproducts 28% Cogeneration plants 2% Other 13% Pellet industry

57% Pulp and paper mills

1826 GWh

The volume of bioenergy supplied

by Setra in 2022. This is sufficient to heat approx. 200,000 apartments.

CSI 91 OUT OF 100 Our latest Customer Satisfaction Index survey, conducted in autumn 2022, showed very positive feedback from our customers. The survey was carried out in cooperation with an external partner as part of Setra’s continuous improvement and development work. The results are an important basis for our ongoing development work.

How the survey was conducted: The customers we interviewed account for around 60 percent of Setra’s sales of sawn and planed wood products in our main markets in Europe, North Africa, Asia and the USA. The questions related to factors such as product quality, delivery capacity, availability and price in relation to quality.

Contact details

8% CLT

Setra works to simplify and streamline industrial wood construction. One example of this is that our structural elements are delivered in exactly the right order, to optimise the efficiency of assembly on site. Another example is our full range of building solutions in CLT and glulam, which includes project planning, construction, logistics and transport services. Together with our partners, we offer turnkey contracts for timber frames.

In 2022, we became the first in Sweden to offer a new moisture barrier for CLT frames, Wetguard from Siga. The protective sheeting is applied directly in our factory, eliminating the need for weatherproof tents.

Product development

Sustainability risks..................... 43

22% Glulam

Offering full building solutions

In addition, we decided to invest in our own production of industrial pellets starting in 2024, using wood shavings from the planers on the site as the raw material. Residual products from CLT production have also been used since autumn 2022 by the Morewood company, which manufactures joists.

GRI content index

Processed wood products

Governance of Setra’s sustainability work..................... 40

has other groundbreaking properties. Next door to Setra Kastet in Gävle is the Pyrocell bio-oil plant, which is jointly owned by Setra and Preem. Built in 2021, the plant converts sawdust into pyrolysis oil, which is used to replace fossil oil in petrol and diesel.

Sustainability work

Our key sustainability areas........ 13

The increase in processing also allows us to make better use of the residual streams that arise, for example by having the offcuts from our component production joined together to form joists. Cross-laminated timber is used in large buildings such as apartment blocks, offices and schools, mainly in Sweden and Norway. Since 2022, we have only used FSC®-certified raw material in our CLT. Setra’s glulam is supplied to builders’ merchants, wood product manufacturers and building contractors, primarily in Sweden and Japan. Our range of construction timber includes planed products, such as roof truss timber and joists. These are sold in Europe, the US and Australia.

Introduction

Introduction.................................. 2

16

Setra Group Sustainability Report 2022

Setra’s sustainability work...... 6 We create green value.................. 7 External factors.............................. 8 Setra’s value chain........................ 10

Climate-smart raw material

Introduction

Introduction.................................. 2

All our wood comes from responsibly managed forests.

Our sustainability goals................ 11 Our contribution to the UN SDGs......................................... 12

Sustainability work

Our key sustainability areas........ 13 Our portfolio................................... 14 Climate-smart raw material......... 17 Resource-efficient business....... 21 Safety, culture and colleagues... 25 Sustainable transport................... 30 Climate report................................ 33

Executive Management............ 38 Board of Directors...................... 39

Sustainability risks..................... 43 GRI content index...................... 45 Contact details............................ 47

Length-selection in the forest results in more wood products

GRI content index

Governance of Setra’s sustainability work..................... 40

Contact details

“We want to get the most out of each tree and so we ensure that the right logs for each product are cut in the forest. When demand for construction timber grew in the US in 2022, we worked with our timber suppliers to adjust and adapt some of the harvest. With the ideal log lengths and diameters for the US market, we were able to produce a larger volume of finished goods, increase yields and make production more efficient.”

Victor Asmoarp, Raw Material Coordinator

17 17

Setra Group Sustainability Report 2022

Setra’s sustainability work...... 6 We create green value.................. 7 External factors.............................. 8 Setra’s value chain........................ 10 Our sustainability goals................ 11 Our contribution to the UN SDGs......................................... 12 Our portfolio................................... 14 Climate-smart raw material......... 17 Resource-efficient business....... 21 Safety, culture and colleagues... 25 Sustainable transport................... 30 Climate report................................ 33

Executive Management............ 38 Board of Directors...................... 39

Sustainability risks..................... 43 GRI content index...................... 45 Contact details............................ 47

Although Setra does not own any forest, it is in the forest that our business begins. We must be able to guarantee that our wood products come from sustainably managed forests where ecological, economic and social values are developed in a balanced manner. We have an indirect responsibility here and are able to set requirements for suppliers.

Forest raw material has a key role to play in the transition to a fossil-free and sustainable society. The forest has the capacity to provide us with renewable raw materials, absorb carbon dioxide from the atmosphere and maintain robust ecosystems. But forests are also affected by climate change, and the risk of damage is increasing. As something that may well impact on us as well, it is an issue that we are actively working to address.

In 2022, Setra purchased only Swedish forest raw material. The value chain is therefore rooted in Swedish forestry, where the forest is seen as a renewable resource that should provide a good yield for generations.

The Swedish Forestry Act has two equal objectives: an environmental objective and a production objective. A key concept is the reforestation obligation, which means that the forest owner must leave seed trees in place when felling, or start planting or sowing within three years of harvesting.

Around 25 percent of Swedish forest land is excluded from forestry activities on some grounds. 9 percent is formally protected, of which two thirds is productive forest land.

11 percent of Swedish forest land has very low productive capacity and is excluded from forestry activities under the Forestry Act. In addition, about 5 percent of the area is voluntarily set aside by forest owners and forestry companies that are FSC or PEFC-certified. Swedish forest owners often show much greater responsibility for the environment and biodiversity than the law requires, for example through voluntary land set-asides.

Raw material purchasing

Carbon sequestration

Setra buys pine and spruce from around 20 suppliers.

Governance

Wood is in many ways a climate-friendly raw material. Responsible forestry has a climate benefit in and of itself because young, growing trees capture more carbon dioxide than older trees. Whilst harvesting releases biogenic carbon dioxide from the soil and the residual branches and tops, a cycle is created in the forest landscape as there is growing forest around the site that absorbs

SETRA’S RAW MATERIAL POLICY As a minimum, wood delivered to Setra must be fully traceable and meet these fundamental criteria.

Certified suppliers check that the wood meets the requirements.

Setra does not accept: • Illegally harvested wood.

• Wood from forests in areas with serious social conflicts.

51% Pine

49%

Spruce

• Wood from forests of high conservation value (as defined by the Swedish Forest Agency).

Contact details

According to our sustainability policy, the timber Setra uses must come from responsibly managed forests. All the sawlogs we buy are certified or controlled in line with Setra’s raw material policy. Since 2019, all timber suppliers have been certified under FSC® and/or PEFC, the world’s largest forest certification schemes. Setra’s sawmills and processing units hold Chain of Custody certification from both FSC and PEFC, as well as FSC Controlled Wood certification. This ensures that we are also in compliance with the requirements set out in the EU Timber Regulation.

Swedish raw material

GRI content index

Governance of Setra’s sustainability work..................... 40

How we work

Sustainability work

Our key sustainability areas........ 13

Our opportunities and challenges

Introduction

Introduction.................................. 2

• Wood from forests in which genetically modified trees are planted

18

Setra Group Sustainability Report 2022

Setra’s sustainability work...... 6 We create green value.................. 7 External factors.............................. 8 Setra’s value chain........................ 10 Our sustainability goals................ 11

carbon dioxide – the excess from harvesting and more besides. Setra’s climate calculations along the value chain are based on the GHG Protocol, which is currently being further developed. Read more about how this will affect Setra in our Climate report on page 33.

When we use the logs to produce wood products, we help to keep the carbon dioxide locked in. Carbon stays longest in wooden buildings, where it is stored for the lifetime of the building and longer if the wood can be recycled. Developing longlasting, renewable products is a vital part

Our contribution to the UN SDGs......................................... 12 Our portfolio................................... 14 Climate-smart raw material......... 17 Resource-efficient business....... 21 Safety, culture and colleagues... 25 Sustainable transport................... 30 Climate report................................ 33

Executive Management............ 38 Board of Directors...................... 39

3.5

million m3

How much timber Setra processed in 2022. All our raw material comes from sustainably managed forests in Sweden.

Traceability system Setra buys all its timber through contracts that include harvesting and delivery to our mills, with much of the raw material coming from our owners, Sveaskog and Mellanskog.

The timber is usually sourced within a 130 km radius of our sawmills, ensuring climate-efficient transport. In 2022, Setra purchased 3.5 million cubic metres of wood in total, of which 51 percent was pine and 49 percent spruce.

One of our core requirements is that the timber can be traced back to the place of harvest. Coordinates from the harvesting site can be checked with the Swedish Forestry Agency to make sure that the wood does not originate from a conservation area.

Our suppliers are certified and check themselves that the timber is traceable and fulfils

all the requirements in Setra’s raw material policy. The requirements of the raw material policy are the same as the FSC® Controlled Wood standard. The suppliers’ certification includes regular inspections by third-party auditors, including checks against the FSC standard, confirming compliance with the raw material policy. If and when Setra buys timber from a non-certified supplier, we conduct our own thorough checks against the raw material policy and the requirements of the certifications.

Supplier collaborations High raw material quality and reliable deliveries are important to Setra. Our main suppliers are our owners Sveaskog and Mellanskog, which provides a firm basis for a secure supply of raw material.

Setra’s close cooperation with suppliers also opens up other opportunities. In 2022, Setra and Sveaskog continued their par-

Sustainability risks..................... 43

FOREST CERTIFICATION

GRI content index...................... 45

FSC ® – Forest Stewardship Council® – is a non-profit, independent, international members’ organisation that provides a system for the voluntary certification of responsible forest management. Over half of the productive forest land in Sweden is FSC-certified. 5 percent of the land is set aside for conservation purposes and a further 5 percent must be managed using adapted methods to preserve and develop natural or social values.

Contact details............................ 47

GRI content index

Governance of Setra’s sustainability work..................... 40

Sustainability work

Our key sustainability areas........ 13

of the green transition, and forestry has a key role to play in this.

Introduction

Introduction.................................. 2

Contact details

PEFC – Programme for the Endorsement of Forest Certification – is an independent umbrella organisation working to promote sustainable private forestry through independent third-party certification. Around 60 percent of Sweden’s forest land is PEFC-certified. 5 percent of the land is set aside for conservation purposes.

19

Setra Group Sustainability Report 2022

Setra’s sustainability work...... 6 We create green value.................. 7 External factors.............................. 8 Setra’s value chain........................ 10 Our sustainability goals................ 11 Our contribution to the UN SDGs......................................... 12 Our portfolio................................... 14 Climate-smart raw material......... 17 Resource-efficient business....... 21

Forestry has an impact on biodiversity. Actions such as felling, planting and thinning affect the habitat for plants and animals.

Nature conservation, in the form of both active measures and voluntary set-asides, is an important element of sustainable forestry for our owners and suppliers. Setra’s owners, Sveaskog and Mellanskog, are working in this field on a broad front. State-owned Sveaskog is Sweden’s largest forest owner, and has obtained FSC® and PEFC certification for its entire holding of managed forest.

Mellanskog is a forest owners’ association with 27,000 members and more than 40 percent of their forests are environmentally certified according to PEFC. Forest owners who have their forests certified undergo auditing by a third party.

Sveaskog has set aside 10 percent, or 300,000 hectares, of its productive forest land for nature conservation. One of Sveaskog’s environmental goals is to manage a further 20 percent of its productive forest land as nature conservation areas.

Mellanskog’s members have voluntarily set aside 55,000 hectares of forest for nature

Climate report................................ 33

Executive Management............ 38 Board of Directors...................... 39 Governance of Setra’s sustainability work..................... 40 Sustainability risks..................... 43 GRI content index...................... 45 Contact details............................ 47

The Swedish forest will be affected by climate change. In a warmer climate, forests are expected to grow faster, but they are also at higher risk of damage from, for example, storms, insect and fungal attacks, or more severe droughts and wildfires.

In the event of a natural disaster, large volumes of timber often need to be handled quickly in the forest. Setra already has experience of receiving damaged timber and we believe that this capability may become more important in a future with a warmer climate. We are investing in rail infrastructure to facilitate the distribution of raw materials between Setra’s production units. This will make our operations more efficient and climate-smart, and help us to better manage timber felled, for example, by storms or fires.

Controlled and certified wood products CERTIFIED PRODUCTS Our ambition is to sell more certified products, although the trend is largely driven by customer demand.

49 percent of the sawn wood products sold by Setra during the year were FSC or PEFC-certified.

The corresponding figure for our processed wood products was 33 percent and for our bioproducts it was 25 percent. In 2022, Setra switched to using only FSC-certified wood in our cross-laminated timber.

Proportion of sawn volumes controlled and certified 100%

100%

20%

23%

20%

20%

2018

2019

■ Controlled

■ PEFC

100%

100%

100%

22%

26%

22%

22%

19%

2020

2021

2022

28%

■ FSC

Contact details

Biodiversity

Sustainable transport................... 30

Climate change

GRI content index

Safety, culture and colleagues... 25

conservation purposes. Many members have set aside more forest area than the 5 percent required under the certification schemes.

Sustainability work

Our key sustainability areas........ 13

ticipation in the DiVISI project concerning digitalised value chains in the forestry industry. Coordinated by the Forestry Research Institute of Sweden (Skogforsk), the project focuses on how data sharing can optimise the flow from harvesting to the sawmill. In addition, Setra participated in a lab study coordinated by RISE Research Institutes of Sweden. Its purpose was to determine whether a near-infrared (NIR) camera could help sawmills sort timber by quickly detecting rot or other defects. Both projects promote greater resource efficiency in the forest and in our production.

Introduction

Introduction.................................. 2

®

All the timber we buy is either controlled in line with Setra’s raw material policy or certified.

20

Setra Group Sustainability Report 2022

Setra’s sustainability work...... 6 We create green value.................. 7 External factors.............................. 8 Setra’s value chain........................ 10

Resource-efficient business

Introduction

Introduction.................................. 2

We work to achieve fossil-free production and extract the greatest possible benefit from each log.

Our sustainability goals................ 11 Our contribution to the UN SDGs......................................... 12

Sustainability work

Our key sustainability areas........ 13 Our portfolio................................... 14 Climate-smart raw material......... 17 Resource-efficient business....... 21 Safety, culture and colleagues... 25 Sustainable transport................... 30 Climate report................................ 33

Executive Management............ 38 Board of Directors...................... 39

Sustainability risks..................... 43 GRI content index...................... 45 Contact details............................ 47

“Kiln drying is the area where we can save the most energy, while hitting the right moisture content also increases the quality of the products. But this is a relatively complex task, which is why we have set up a forum where we gather expertise, learn from each other and share our successes. We will also soon have a common control system for all Setra’s drying kilns, meaning that we can get even more out of our collaboration. We will see capacity increases, reduced heat demand and quality improvements at all of Setra’s units.”

GRI content index

Governance of Setra’s sustainability work..................... 40

Shared approach to key energy issue

Contact details

Tommy Oscarsson, Site Manager in Färila and leader of Setra’s Strategic Drying Forum.

21

Setra Group Sustainability Report 2022

Setra’s sustainability work...... 6 We create green value.................. 7 External factors.............................. 8 Setra’s value chain........................ 10 Our sustainability goals................ 11 Our contribution to the UN SDGs......................................... 12 Our portfolio................................... 14 Climate-smart raw material......... 17 Resource-efficient business....... 21 Safety, culture and colleagues... 25 Sustainable transport................... 30 Climate report................................ 33

Executive Management............ 38 Board of Directors...................... 39

Sustainability risks..................... 43 GRI content index...................... 45 Contact details............................ 47

As a renewable raw material, wood has a vital role to play in the green transition and every log should be used as efficiently as possible. Wood processing is a relatively energy-efficient process with low emissions compared to other manufacturing industries.

Our environmental impact consists mainly of energy use, noise and emissions from machinery and bio-boilers. We choose renewable electricity and work systematically to reduce energy consumption. Bark, wood chips and shavings from manufacturing are used as biofuel in our own production and we are constantly increasing the share of renewable fuels. Although the direct impact of our operations is a small part of Setra’s overall climate footprint, this is where we have the most influence. Our ambition is therefore to replace the very last fossil energy in production with renewable alternatives.

How we work

Governance

A sense of responsibility to utilise the entire log and convert as much as possible into long-lasting building products drives all of Setra’s operations. We strive to achieve a high saw yield, i.e. a high volume of sawn product in relation to the volume of incoming timber. The yield is affected by the log dimensions, sawing technique and the way the log is processed on the basis of the financial value of the end products and customer demand.

The saw yield was 49.7 (49.2) percent in 2022. We have implemented several measures to improve yields in recent years. X-ray scanners have been installed at all our pine mills, plus we have invested in GPS Timber software for more efficient timber handling and created systematic practices that include more regular checks and follow-ups.

This development work will continue in 2023.

In further processing, we also strive for the highest possible yield, e.g. by using flexible width dimensions in the cross-laminated timber factory and joining cut-out sections in the component factory to form joists. Read more about how we use residual flows in the section Our portfolio on page 16.

Energy consumption Our total energy consumption amounted to 671 GWh in 2022. Thermal energy accounted for 78 percent, electrical energy just under 18 percent and fuel consumption a little over 4 percent.

of all the energy we consumed in 2022 was renewable.

Drying and sawing are the most energyintensive parts of our processes. Electricity consumption per cubic metre of sawn timber has increased by 7 percent over the past five years, while fuel consumption has fallen by just over 1 percent, see charts on page 23. Electricity and diesel consumption is affected, among other things, by the fact that

we are further processing an increasing proportion of our wood products, as this means additional machining and transport.

Energy efficiency We have been working systematically to identify and implement energy saving measures for several years. Setra is subject to the 22

Contact details

Setra’s operations are certified according to the ISO 14001 standard and we apply systematic environmental management that involves procedures and continuous monitoring. Our operations require an environmental permit and are subject to comprehensive environmental legislation. Resource efficiency and energy recovery play a key role in the work to reduce our climate footprint and are therefore monitored at both Group and local level. The basic principles underpinning our approach to our environmental and climate impact are set out in Setra’s sustainability policy, which can be read at setragroup.com.

When setting our ambitious goals, we do

96%

Getting the most from every log

GRI content index

Governance of Setra’s sustainability work..................... 40

so with a strong belief in our ability to get a little better every year.

Sustainability work

Our key sustainability areas........ 13

Our opportunities and challenges

Introduction

Introduction.................................. 2

Setra Group Sustainability Report 2022

Introduction

Introduction.................................. 2 Setra’s sustainability work...... 6

Energy consumption 2022

Electricity consumption 2018–2022

Diesel consumption 2018–2022

Setra consumed a total of 671,248 MWh

kWh/m3 sawn timber

kWh/m3 sawn timber

68.6

We create green value.................. 7 122,443 MWh Renewable electricity

External factors.............................. 8 Setra’s value chain........................ 10 Our contribution to the UN SDGs......................................... 12 Our portfolio................................... 14

Safety, culture and colleagues... 25

2019

2020

16.0

15.8

15.7

16.0

15.8 15.0 Target 2025 (-15% compared with 2010)

513,284 MWh Bioenergy (district heating or own boiler)

6,445 MWh Heating oil (district heating or own boiler)

Sustainable transport................... 30 Climate report................................ 33

2018

2021

2022

Setra’s electricity consumption per cubic metre of sawn timber has increased, largely because we are processing an increasing proportion of our products, for example at the planing mill in Hasselfors and the CLT factory in Långshyttan. Excluding processing, a general reduction in electricity consumption per cubic metre can be seen, as a result of strategic work on energy efficiency.

2018

2019

2020

2021

Sustainability work

10,191 MWh Biodiesel in internal transport

Our key sustainability areas........ 13

Resource-efficient business....... 21

64.3

18,885 MWh Diesel in internal transport

Our sustainability goals................ 11

Climate-smart raw material......... 17

62.4

63.7

66.8

2022

Diesel consumption per cubic metre of sawn timber has decreased slightly over the past five years. The share of biodiesel is shown in green. Our ambition is to continue to make internal transport more efficient and to further increase the biodiesel in the fuel mix over the next few years, with a view to becoming completely fossil free in the longer term.

Executive Management............ 38 Board of Directors...................... 39

Sustainability risks..................... 43 GRI content index...................... 45 Contact details............................ 47

More efficient drying Setra’s drying kilns currently account for more than 50 percent of electricity con-

sumption and 90 percent of heat consumption. We have therefore set up a Strategic Drying Forum, with representatives from all the units. The plan going forward is to decide on specific activities and efficiency targets from 2023 onwards.

Setra will also invest in a new single control system for all the company’s dryers in the coming year. The system is expected to deliver significant energy savings, quality improvements and increased capacity, and to facilitate the work of the Strategic Drying Forum. As a conservative estimate, the investment is expected to increase capacity by at least 10 percent and cut around 6 percent of Setra’s total electricity consumption.

Renewable electricity and heat For the past five years, we have been buying only ecolabelled electricity from hydro­power, wind power and bioenergy.

96 percent of the energy we consume is

renewable. 99 percent of our heat is generated from renewable fuels by burning our own bark and shavings in bio-boilers. Fossil oil is only used when the regular boilers are being maintained or repaired.

Setra has its own boilers in Färila, Heby and Nyby. In Nyby we also produce district heating for the residents of nearby Björklinge. In several locations we work with energy companies that use biofuel from Setra in their district heating boilers and supply some of the energy back to our operations.

In 2022, we invested in solar panels for the first time, a strategic move that increases our provision of renewable energy and will reduce the cost of electricity for a long time to come. The solar panels will be located in Gävle and King’s Lynn and are estimated to reduce carbon emissions by 52 and 133 tonnes of carbon dioxide per year, respectively. We will now be assessing the out23

Contact details

than before, in order to identify the under­ lying causes.

Over the next few years, our investments in new technology will also increase efficiency and product quality at Setra’s units. The planing mill in King’s Lynn was upgraded with a new bandsaw, planer and warehousing in 2022. Heby is being equipped with a new drying kiln, Hasselfors is getting new drying kilns and an automated board line, and extensive investments are also being made in Malå and Skinnskatteberg. These core investments will contribute to more efficient processes.

Setra’s cross-laminated timber factory increased productivity by 90 percent in 2022 and will ramp up production further by 2025.

GRI content index

Governance of Setra’s sustainability work..................... 40

Swedish Act on Energy Audits in Large Enterprises (EKL) and all units are surveyed at least once every four years. In 2022, energy consumption was surveyed at Färila, Långshyttan and Malå, and the results were reported to the Swedish Energy Agency.

Energy consumption has been reduced over time thanks to numerous small-scale improvements. Switching from hydraulic oil-powered systems to electric, replacing old compressors, preventing air leakage and installing heat recovery systems are some of the measures that have had a particularly sizeable impact and are being implemented gradually. Some of the energy efficiency measures will also be included in our action plan for climate neutrality.

Over the past year, we have had an increased focus on availability in production, i.e. minimising downtime and thereby increasing efficiency. Downtime is measured and we conduct more root cause analyses

Setra Group Sustainability Report 2022

Setra’s sustainability work...... 6 We create green value.................. 7 External factors.............................. 8 Setra’s value chain........................ 10 Our sustainability goals................ 11 Our contribution to the UN SDGs......................................... 12 Our portfolio................................... 14 Climate-smart raw material......... 17 Resource-efficient business....... 21 Sustainable transport................... 30

The tractors and trucks we use outdoors run on diesel and had a 39.5 percent renewables mix last year. The proportion of biodiesel varies between units, depending on local agreements with suppliers. Going forward, we intend to increase the biodiesel in the fuel mix and in the longer term we will move to completely fossil-free alternatives.

Electrically powered forklifts and trucks may also be relevant, so we are currently investigating the potential and feasibility of pilot schemes with our partners.

At the same time, we have several initiatives underway to make internal logistics more efficient. Our goal is to achieve a 15 percent reduction in diesel consumption per cubic metre of sawn timber by 2025, compared with the base year 2010. The initiatives include new software to help improve timber management, training in eco-driving and investment in load plates to automate loading. In Långshyttan, internal logistics are being reviewed on an ongoing basis as the business grows.

Setra’s increased level of processing has led to more internal transport between

Climate report................................ 33

Executive Management............ 38 Board of Directors...................... 39 Governance of Setra’s sustainability work..................... 40 Sustainability risks..................... 43 GRI content index...................... 45 Contact details............................ 47

Noise levels are always a challenge and can be the subject of complaints from neighbours, which makes this a priority issue for new investments and changes in operations.

We perform noise measurements whenever necessary, in accordance with our environmental permits. The major investments planned at the units will make meeting the noise requirements of the new environmental permits quite a challenge. Noise reduction measures are therefore being incorporated right from the design stage.

In recent years, we have made special efforts to reduce the noise level around the glulam factory in Långshyttan, for the benefit of local residents. Noise levels have been cut by almost 10 decibels.

At the new planing mill in Hasselfors, shavings have become a nuisance to local residents. Changes in extraction and ventilation have been made to counteract the problem. This work will continue in 2023, when the shavings will be loaded under a tent to prevent them being blown around.

Waste sorting and recycling Sorting, recycling and using recycled materials in our processes is a matter of course for Setra. Our ambition is to increase the degree of recycled material and expand waste sorting.

Our sorting categories in our production and processing units and offices include household waste, metal, scrap metal, plastic, cardboard, office paper, corrugated

Setra’s waste materials are managed by an external party.

We are working together to improve and streamline waste management.

Hazardous waste from Setra is reported in the Swedish Environmental Protection Agency’s electronic waste register. In addition to this, small amounts of waste have been dispatched from Nyby, Skinnsberg and Långshyttan through another external party, amounting to around 18,000 kg of oily sludge and storm drain sludge.

To fulfil its producer responsibility, Setra is affiliated with the Swedish packaging recycling initiative FTI. Via FTI’s customer portal, the annual quantities of packaging are also reported to the Swedish Environmental Protection Agency. The amount of plastic reported in the Swedish market for 2022 is 268.6 tonnes (straps and packaging).

Categories (kg)

■ 2021

■ 2022

Alternative Hazardous raw waste materials*

Plastic

Material recycling % 70 60

62.6

63.4

2021

2022

50 40 30 20 10 0

400,000

300,000

200,000

100,000

0

Iron

Paper

Metal

Electronics

* Combustibles, wood waste and ash for landfill.

board, electricals, batteries and scrap wood. Computers are also recycled and parts reused. Overall, around 63 percent of Setra’s waste recycling was sent for material recovery in 2022.

The timber packages are partially wrapped in plastic covers containing up to

10 percent recycled material and a covering film containing up to 65 percent recycled material. The thicker plastic straps used for packaging are made from PET that is also recycled.

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Contact details

Internal transport

Noise and other disturbances

MATERIAL RECYCLING

GRI content index

Safety, culture and colleagues... 25

the units in Sweden. Transport is currently managed by a main carrier and there are good opportunities to collaborate on climate-smart transport arrangements as volumes grow.

Sustainability work

Our key sustainability areas........ 13

comes, as there are several production units that have large surfaces available. Through green investments in photovoltaics, we are also signalling the value of renewable electricity and domestically produced electricity for our society and the energy system.

Our goal is fossil-free production.

In 2023, we plan to take the first steps towards making one or two of our units completely fossil free. The fossil oil we use in our boilers and the fossil fuels in our machinery need to be phased out, and investigations and feasibility studies have begun in this regard.

Introduction

Introduction.................................. 2

Setra Group Sustainability Report 2022

Setra’s sustainability work...... 6 We create green value.................. 7 External factors.............................. 8 Setra’s value chain........................ 10 Our sustainability goals................ 11

Safety, culture and colleagues

Introduction

Introduction.................................. 2

We put safety first and work to continuously improve our operations and ourselves to best drive Setra forward.

Our contribution to the UN SDGs......................................... 12

Sustainability work

Our key sustainability areas........ 13 Our portfolio................................... 14 Climate-smart raw material......... 17 Resource-efficient business....... 21 Safety, culture and colleagues... 25 Sustainable transport................... 30 Climate report................................ 33

Executive Management............ 38 Board of Directors...................... 39

Sustainability risks..................... 43 GRI content index...................... 45 Contact details............................ 47

“Preventing accidents at Setra is our top priority. Throughout 2022, we have worked together to firmly place the focus on safety, not least by creating a routine where we raise awareness of our main risks, work on greater machine safety and step up internal communication on safety issues. We are now seeing a significant reduction in the most serious accidents, which is extremely gratifying and shows that we are on the right track.

However, we will not rest until we achieve our zero vision and we will do everything we can to keep the positive trend going.”

GRI content index

Governance of Setra’s sustainability work..................... 40

Fewer accidents with tighter safety focus

Contact details

Jonas Gustavsson, SVP Production and Sustainability

25

Setra Group Sustainability Report 2022

Setra’s sustainability work...... 6 We create green value.................. 7 External factors.............................. 8 Setra’s value chain........................ 10 Our sustainability goals................ 11 Our contribution to the UN SDGs......................................... 12 Our portfolio................................... 14 Climate-smart raw material......... 17 Resource-efficient business....... 21 Safety, culture and colleagues... 25 Sustainable transport................... 30 Climate report................................ 33

Executive Management............ 38 Board of Directors...................... 39

Sustainability risks..................... 43 GRI content index...................... 45 Contact details............................ 47

The working environment, employees and business ethics are key elements of our sustainability policy. Our internal management system covers occupational health and safety, a subject that is addressed regularly via

Average no. of employees 21% women

How we work Values and leadership Setra is a values-driven company. Our core values of responsibility, commitment and innovation are to influence everything we do. Living by our values creates a favourable climate at work and ultimately strengthens our competitiveness.

We make a special effort to train the company’s managers through our own leadership development programme, which is mandatory for all Swedish managers with personnel responsibilities.

Up to five times a year, Digital Leadership Forums are organised for managers to receive ongoing skills development. Preventing, managing and detecting harmful stress at both individual and team level has been a focus area during the year. Setra also has a digital manager’s handbook to support managers with personnel responsibilities.

We apply a shared model for management by objectives, which is based on managers and other leaders clearly communicating their expectations and setting goals in consultation with employees. Everyone who works at Setra should have the opportunity to develop. We strive to maintain an ongoing

Our Ouremployees employees Distribution Distributioninin2022 2022 74% 74% Blue Blue collar collar

26% 26% White White collar collar

93% 93% Employees Employees ininSweden Sweden

Contact details

Governance

850

GRI content index

Governance of Setra’s sustainability work..................... 40

Every weekday morning, 850 people go to work at Setra. Making sure that they are not injured at work, and ensuring their well-being and development, is the most important factor for our success as a company. The wood industry is a high-risk sector in terms of workplace accidents and we know that prevention is crucial. Maintaining a strong safety culture that prevents accidents requires clear leadership, commitment and change management throughout the organisation, something that we are working hard on and monitoring closely. Incorrect behaviour is responsible for a significant proportion of the accidents that occur, which is why we work to encourage and give guidance on correct behaviour.

At Setra we try to live by our vision of Grönsamhet – generating green value not just for ourselves but also our customers, society and nature. We want to contribute to a fair and equal climate at our own workplaces, in the wider wood and construction industry and in all the markets in which we operate.

We contribute to thriving rural communities by creating jobs in modern sawmills and processing plants. Recruiting more women and increasing diversity in the company is a vital issue, as is maintaining high ethical standards in all business relations.

risk analyses, safety inspections and internal audits for example. Workplace accidents are reported and followed up in the sawmill industry’s joint SIA system. Our units all comply with competition legislation, guidelines from the Swedish Anti-Corruption Institute, and international provisions regarding sanctions. In line with the Act on the Protection of Persons Reporting Irregularities, Setra has an external whistleblowing function that guarantees anonymity.

Sustainability work

Our key sustainability areas........ 13

Our opportunities and challenges

Introduction

Introduction.................................. 2

7% 7% Employees Employees ininother other countries countries

26

Setra Group Sustainability Report 2022

dialogue on performance and results, with the annual employee appraisal between each employee and their manager as a key component. In 2022, 86 percent of our employees in Sweden completed their employee appraisal.

Statistical monitoring of the number of appraisals is carried out by HR and within each team.

Setra’s sustainability work...... 6 We create green value.................. 7 External factors.............................. 8 Setra’s value chain........................ 10 Our sustainability goals................ 11 Our contribution to the UN SDGs......................................... 12

Climate-smart raw material......... 17 Resource-efficient business....... 21 Safety, culture and colleagues... 25 Sustainable transport................... 30 Climate report................................ 33

Executive Management............ 38 Board of Directors...................... 39 Governance of Setra’s s ustainability work....................... 40 Sustainability risks..................... 43 GRI content index...................... 45 Contact details............................ 47

Workplace accidents 25 20 15 10

10 5 0

2018

2019

2020

2021

2022

Lost Time Accident (LTA) Frequency Rate: number of accidents resulting in sick leave, calculated per million hours worked 10 Interim target for LTA Frequency Rate in 2025 Workplace accidents are reported and followed up in the sawmill industry’s joint SIA system.

Accident frequency is measured using the LTA (Lost Time Accident) Frequency Rate, which presents the number of accidents resulting in sick leave per million hours worked. The result for 2022 is an LTA of 13.2, which is more than 40 percent lower than in 2021. This statistic covers everyone who works at Setra, including temporary staff and long-term contractors.

27

Contact details

We have a zero vision for workplace accidents – no one at Setra should be injured at work. In recent years, we have seen a general rise in the number of serious workplace accidents, which is why in 2022 we introduced a number of measures to reverse this trend (see the section on Preventive safety work). Fortunately, this has paid off and the number of serious accidents decreased significantly in 2022, compared with the previous year.

However, three serious accidents occurred in the past six months, which only emphasises the point that safety must always be in focus, and the importance of working proactively and preventively. With our sights set on a zero vision, we have adopted an interim target for 2025 that the accident rate should not exceed 10 per million hours worked. Setra’s results are on a par with comparable companies and 2022 has seen a general improvement across the industry.

The most common accidents at Setra are slips, cuts and crushing injuries. An in-depth root cause analysis is carried out immediately after each accident leading to sick leave. We investigate whether working practices were breached, what the consequences were and whether any action is required. The conclusions are then shared

Safety, quality, reliability and productivity are interrelated and part of our systematic improvement work. We follow up on leadership and goals at daily briefings in the production units, and improve in response to non-compliances. The whole shift is involved in production and safety issues and everyone is expected to contribute according to their professional role. We often share information and practices between production units and are striving to be even better at this.

Everyone at Setra is also expected to think proactively and report risk observations, near misses and accidents. These reports are regularly compiled and form the basis of our continuous improvement work.

The number of risk observations and near misses has more than doubled in recent years, which we see as a good sign. We aim for a high proportion of reports per accident and track the ratio as a safety index.

The reduction in serious accidents in 2022 can be linked to the high focus on safety within the organisation. Managers in production, where the majority of Setra’s employees are located, have started to attend weekly leadership briefings aimed at developing leader behaviours. Risks and dilemmas are discussed at least once a month in all working groups, and when someone is injured at work, we endeavour to find them alternative duties.

Basic training in safe working practices is mandatory for all new employees. We use SSG’s safety training course, which is an established concept in Swedish industry.

The industry-specific training programme

GRI content index

Reporting and follow-up of accidents

Our portfolio................................... 14

Preventive safety work

Sustainability work

Our key sustainability areas........ 13

with all staff on the intranet and information screens.

Introduction

Introduction.................................. 2

Setra Group Sustainability Report 2022

Setra’s sustainability work...... 6 We create green value.................. 7 External factors.............................. 8 Setra’s value chain........................ 10 Our sustainability goals................ 11 Our contribution to the UN SDGs......................................... 12 Our portfolio................................... 14 Climate-smart raw material......... 17 Resource-efficient business....... 21 Safety, culture and colleagues... 25 Sustainable transport................... 30 Climate report................................ 33

Executive Management............ 38 Board of Directors...................... 39

Sustainability risks..................... 43 GRI content index...................... 45 Contact details............................ 47

Working environment Employees and managers share respon-

Employee health Our objective is to have a healthy attendance rate of at least 95 percent at Setra. We are well aware that numerous factors affect how often we are off sick – and for how long – and we are working on the issue in several ways, for example in employee appraisals, by analysing the results of the Employee Pulse survey and in leadership development efforts. The rate of sick leave stood at 6.6 (5.8) percent in 2022.

We encourage exercise and offer all our employees an annual fitness allowance.

Setra also sponsors the employees’ own Setra Sports Club, which organises a range of activities every year to improve the well-being of its members.

Setra has partnered with a company that is helping us to tackle the issue of concealed mental health issues stemming from stress or problems with drugs and alcohol.

All Setra managers with subordinate employees are trained in spotting the signs of concealed mental health issues. Setra has a centralised agreement for occupational healthcare. The occupational health service is an expert resource for work environment issues that we use in our preventive wellness and occupational health and safety work, and in rehabilitation cases.

Attractive employer To ensure our long-term competitiveness, we need to be an attractive employer, which means both attracting the right skills and building pride within the organisation. Many of the people who work or apply to work at Setra appreciate our vision of Grönsamhet

95%

Our goal is for at least 95 percent healthy attendance in a normal year.

Total sick leave Percent, employees in Sweden, including long and short-term absences 6.6 6.3 5.8 5.2 4.5

Contact details

All of Setra’s production lines are fitted with barriers and safety guards that disconnect the power if anyone comes too close to the machinery. All the units except Hasselfors also have external perimeter protection to create a safer environment around our facilities. There are plans to improve the perimeter protection in Hasselfors as well.

Our production units always require hi-vis vests and hearing protection as a bare minimum, as well as additional protective equipment for certain types of work, based on the assessed risk.

Setra is currently involved in a multi-year project on machine safety, as part of which we are reviewing and risk-assessing the production lines together with external machine safety experts. The results of the risk assessment will become our concrete action plan for machine safety and possible CE marking of lines.

To maintain a high level of safety on our sites, we endeavour to keep the working environment free from alcohol and drugs. We have alcohol locks on vehicle key cabinets and conduct random alcohol and drug tests on our own staff, as well as contractors and agency staff. One unit also conducted a gate test that checked all employees as they came in. This is set to be rolled out to more units in 2023.

Employee Pulse survey will be reported as soon as a sufficiently large dataset has been compiled.

GRI content index

Governance of Setra’s sustainability work..................... 40

Perimeter protection and personal protective equipment

sibility for maintaining and improving our working environment. Responsibility for health and safety is delegated to the managers at Setra. Each production unit has its own safety committee tasked with following up and taking decisions on issues relating to the working environment. In 2023, we will launch a central forum for sustainability issues in the working environment. Chaired by the CEO, the forum will support this work at an overarching level.

Setra’s managers, leaders and safety officers all take the training course titled BAM – Bättre arbetsmiljö (Better Working Environment). This lays the foundation for systematic work to improve the physical, organisational and social working environment. The training course is held every year to include all new managers, leaders and safety officers.

The BAM training, the leadership development programme and our work on the Organisational and Social Work Environment (OSWE) also include aspects such as workplace culture and victimisation, for which there is of course zero tolerance.

Setra has a system for reporting, processing and following up on victimisation.

Every two months, we survey the health, well-being and working environment of our employees in an Employee Pulse survey.

This comprises short digital questionnaires that also ask for comments on the responses. The survey was conducted for the first time in November 2022 and replaces our annual employee survey. The new solution, with its frequent consultation and quick feedback, fits well with Setra’s organisational structure. We hope and believe it will foster a culture where every employee and team takes ownership of the results and improvement work. The outcome of the

Sustainability work

Our key sustainability areas........ 13

Safe Sawmills is also mandatory. Before contractors can carry out work at our units, they are required to have completed SSG Entré, a basic training programme that is standard in Swedish industry.

Introduction

Introduction.................................. 2

2018 2019 2020 2021 2022 28

Setra Group Sustainability Report 2022

Setra’s sustainability work...... 6 We create green value.................. 7 External factors.............................. 8 Setra’s value chain........................ 10 Our sustainability goals................ 11 Our contribution to the UN SDGs......................................... 12 Our portfolio................................... 14

Employees in Sweden* Form of employment

Heby

Malå

Färila Kastet Nyby Skinnskatteberg Solna Gävle

Total

Employees

Långshyttan Hasselfors 144

105

95

77

74

73

74

42

31

792

792

Permanent employees

143

95

84

71

63

62

65

39

27

715

715

Temporary staff**

1

10

11

6

11

11

9

3

4

77

77

Employees in other countries* Form of employment

UK

China

Poland

Spain

Japan

Germany

Austria

Total

Resource-efficient business....... 21

Employees

48

3

2

2

2

1

1

59

Safety, culture and colleagues... 25

Permanent employees

48

3

2

2

2

1

1

59

Form of employment

Men

Women

Total

Employees

672

179

851

Permanent employees

614

160

774

Temporary staff**

58

19

77

Sustainable transport................... 30 Climate report................................ 33

Executive Management............ 38 Board of Directors...................... 39 Governance of Setra’s sustainability work..................... 40 Sustainability risks..................... 43

Men and women*

* Average number of employees (headcounts) by form of employment in 2022. ** Including probationary period, cover work, seasonal employment.

All of Setra’s employees in Sweden are covered by collective bargaining agreements. Employees in other countries have local agreements in line with their country’s regulations. Fixed-term contracts are used for probationary periods and to create flexibility in the production organisation.

GRI content index...................... 45 Contact details............................ 47

have a lot to gain from more equal gender representation. During the year, we organised a talk on macho culture and norms.

Setra also took a stand in support of a more equal construction industry by signing the Dala Appeal – an initiative outlining practical measures from the Women Building Sweden network. Women make up 21 percent of the workforce, and that figure is slowly growing. The proportion of women is higher among managers, at around 25 percent. The last pay survey was conducted

in 2022 and showed equal remuneration levels. When recruiting new staff, we always take the diversity and equality perspective into account. When several applicants fulfil the basic requirements, we choose the under-represented gender.

Recruitment and skills development During the year, Setra has recruited mainly for our wood industry hub in Långs­hyttan.

We are noticing that sustainable wood construction is attractive to applicants, and that

Setra strives to maintain high ethical standards in all our business relations and to act responsibly in all interactions with our customers, suppliers and partners.

Our business ethics guidelines cover compliance with competition legislation, gifts and hospitality, plus our Code of Conduct for Suppliers. We have a digital course on business ethics that is aimed at all white collar workers, agents who work on behalf of Setra, and production staff who have contact with customers, suppliers or partners.

Setra also has a white book that provides guidance on business ethics dilemmas, based on real-life cases.

An external whistleblowing service for anonymous reporting was introduced in 2022, in line with current Swedish legal requirements. Reports go to the external supplier for initial consideration, and then on to the CEO, CFO or SVP HR at Setra.

29

Contact details

and are motivated to help build a sustainable business. Setra is growing and changing as we develop our offering and employees are expected to want to contribute, try new things and be part of the journey. We are also committed to continuous improvement as an employer. All permanent employees who leave are asked to fill in a questionnaire about their time at Setra and why they chose to go.

The wood industry, like the construction industry, is very male-dominated, and we

Business ethics

GRI content index

Climate-smart raw material......... 17

there is competition in Swedish industry to recruit employees with the right skills. Setra uses recruitment agencies to fill positions in the production organisation. Promoting gender equality is recognised as an important part of their mission and this has resulted in more female applicants.

Setra’s operations increasingly require technical expertise and the ability to handle more complex tasks. New duties, knowledge sharing with colleagues and job rotation are ways to increase internal know-how. There are also opportunities for external training and advice from external consultants. Part of the annual appraisal involves writing an individual development plan, and we encourage all our employees to maintain a continuous dialogue about their development.

Sustainability work

Our key sustainability areas........ 13

EMPLOYMENT BREAKDOWN

Introduction

Introduction.................................. 2

Setra Group Sustainability Report 2022

Setra’s sustainability work...... 6 We create green value.................. 7 External factors.............................. 8 Setra’s value chain........................ 10 Our sustainability goals................ 11

Sustainable transport

Introduction

Introduction.................................. 2

Setra’s operations are dependent on transport, and since it accounts for the majority of our greenhouse gas emissions, we are working in a targeted way to make it as climate efficient as possible.

Our contribution to the UN SDGs......................................... 12

Sustainability work

Our key sustainability areas........ 13 Our portfolio................................... 14 Climate-smart raw material......... 17 Resource-efficient business....... 21 Safety, culture and colleagues... 25 Sustainable transport................... 30 Climate report................................ 33

Executive Management............ 38 Board of Directors...................... 39

Sustainability risks..................... 43 GRI content index...................... 45 Contact details............................ 47

Major rail investment lowers emissions

GRI content index

Governance of Setra’s sustainability work..................... 40

Contact details

“Trains are the best mode of transport from a climate perspective and we are making a strategic investment so that we can transport more by rail. Creating rail links to the units in Gävle, Hasselfors, Heby and Skinnskatteberg will enable us to increase rail transport for our timber by 30 percent within a couple of years. In addition, we will be better prepared for unforeseen events such as storms, fires and insect attacks, as we will be able to move large volumes from affected areas to sawmills further away.”

Klas Flygare, Bioproducts & Raw Material Director.

30

Setra Group Sustainability Report 2022

Setra’s sustainability work...... 6 We create green value.................. 7 External factors.............................. 8 Setra’s value chain........................ 10 Our sustainability goals................ 11 Our contribution to the UN SDGs......................................... 12 Our portfolio................................... 14 Climate-smart raw material......... 17 Resource-efficient business....... 21 Safety, culture and colleagues... 25 Sustainable transport................... 30 Climate report................................ 33

Executive Management............ 38 Board of Directors...................... 39

Sustainability risks..................... 43 GRI content index...................... 45 Contact details............................ 47

Governance

Setra chooses partners with care and only works with reliable shipping lines and dispatchers who maintain a high level of quality, have a long-term focus and comply with all applicable laws and regulations.

We maintain a close dialogue with the companies we use and have regular review meetings to follow up on guidelines, requirements, conditions, statistics and sustainability and development work.

Setra’s goal: climate-neutral domestic transport Our overall climate goal is to be climate neutral by 2030, and this includes our domestic transport. In environmental terms, trains are the best mode of transport and we use them as often as possible.

However, the majority of our raw material currently travels by timber truck from forest to sawmill. In 2022, around 5 percent of the raw materials were transported by rail.

For our deliveries to customers, a somewhat larger share is transported by rail, with about 22 percent of the goods travelling some of the distance by train. Rail is particularly suitable for large, continuous flows and we therefore use rail transport from sawmill to port.

In our roadmap for climate neutrality, we are working to gradually increase the share of rail transport. In recent years, Setra has made several important rail investments in cooperation with the Swedish Transport Administration. After extending the track at our sawmills in Hasselfors and Skinnskatte­ berg (2021–2022), we are now focusing on Heby, where the industrial track and

CLIMATE-POSITIVE PRODUCTS

terminal are expected to be completed in 2024–2025. Connecting more of our units to the rail network will allow us to reduce carbon emissions, while making it easier to move raw materials and bioproducts between units.

Our wood products are climate positive even when transported to the other side of the world, as they store several times more carbon dioxide than is emitted along the entire supply chain.

See how big the sequestration effect is for different destinations in the table on page 35.

Contact details

The transport we use should be efficient, safe and sustainable. Our requirements reflect the Swedish Forest Industries Federation’s sustainability criteria for road transport. Setra’s Code of Conduct for Suppliers, based on the UN Global Compact and relevant international conventions, also sets basic sustainability requirements.

The Code of Conduct is signed as part of all contracts we enter into with our carriers.

Working relationships, dialogue and follow-up

GRI content index

Governance of Setra’s sustainability work..................... 40

Setra’s sawmills and processing units are located where the forest is – in the countryside. However, the market for wood products is global and about 80 percent of our produced volume is exported.

This transport accounts for around 85 percent of our emissions, but our major challenge is that all our logistics services are bought in, which makes it more difficult to influence factors such as emissions and working conditions. Nevertheless, we see great potential in rail investments, as well as cooperating with and imposing requirements on carriers. It is also important to bear in mind the inherent climate benefits of wood. Although our wood products are transported to the other side of the world, they have the ability to sequester several times more carbon dioxide than is emitted along the entire supply chain.

How we work

Sustainability work

Our key sustainability areas........ 13

Our opportunities and challenges

Introduction

Introduction.................................. 2

31

Setra Group Sustainability Report 2022

Setra’s sustainability work...... 6 We create green value.................. 7 External factors.............................. 8 Setra’s value chain........................ 10 Our sustainability goals................ 11 Our contribution to the UN SDGs......................................... 12

Efficient road transport For domestic road transport, we have a long-term contract with a main supplier, which creates the conditions for efficient and smart transport chains, with fossil-free fuels as part of the solution. In 2022, our main carrier had an average fossil-free mix of 34 percent in the transport flows involving Setra. Our main carrier has a well-

Our portfolio................................... 14 Resource-efficient business....... 21

PRINCIPAL TYPE OF TRANSPORT

Safety, culture and colleagues... 25

Share of sold wood products by volume

Climate-smart raw material......... 17

Sustainable transport................... 30 Climate report................................ 33

Executive Management............ 38 Board of Directors...................... 39

Sustainability risks..................... 43

57% 43% Sea

Road

In many cases we are dependent on cargo ships to reach our export markets. Maritime transport produces fewer emissions per tonne-kilometre than road transport, but even at sea we need to reduce our climate impact, so Setra is actively working to find more efficient shipping routes and partnerships. Under a proposal from the European Commission, the shipping sector will be included in the EU’s emissions trading scheme from 2024. The proposal also aims to increase the use of greener fuels in maritime transport.

Efficiency in every load

GRI content index...................... 45 Contact details............................ 47

Transport by sea

22%

Part of the journey (sea and road) by rail

Setra’s road transport has 34 percent renewables in its fuel mix, on average. 18 percent of our road transports runs on fully renewable fuels.

Our contribution to a greener transport sector

Lobbying through industry collaborations

As a processor of forest raw materials, Setra has a unique opportunity to produce renewable fuel that reduces greenhouse gas emissions from the transport sector.

Since 2021, sawdust from Setra Kastet in Gävle has been used to produce pyrolysis oil, which can replace some of the fossil raw material in petrol and diesel. The factory is located next to our sawmill and is operated

by Pyrocell, a company that Setra co-owns with fuel company Preem. Using Pyrocell’s bio-oil reduces greenhouse gas emissions by as much as 96 percent compared to fossil oil.

We want to make transport even more sustainable by actively participating in various industry collaborations and forums. Setra is involved, for example, in lobbying via the Swedish Forest Industries Federation, which wants to see reduced emissions through longer and heavier trucks, electrification of heavy traffic and so on. As Sweden’s largest buyer of transport services, the forest industry has the capacity to influence the transport sector.

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Contact details

Setra’s domestic transport and freight within Europe is mainly by road.

Maritime transport is used to ship goods to the UK, the US, North Africa, the Middle East, Asia and Australia.

Rail is used for a small proportion of the timber transport and for container transport on sections to the ports.

Efficient logistics flows are an important part of the business and can also make a big difference to the climate. We work with our carriers to optimise route planning, maximise the use of cargo space and minimise the distance travelled without cargo. At our sawmills, we weigh the timber packages to optimise the load factor and contribute to safer distribution. The partnership with our main carrier means, for example, that the same vehicle can be used to transport timber from a sawmill to a processing unit, collect finished products and deliver them to nearby customers.

RENEWABLE FUELS

GRI content index

Governance of Setra’s sustainability work..................... 40

developed environmental programme, with a goal of being fossil free by 2030, and we are actively exploring future technologies, alternative fuels and vehicles of the future together.

When delivering cross-laminated timber, we use completely fossil-free transport solutions running on the renewable fuel HVO. The trucks that transport our containers from the sawmill to the port or rail terminal also run on HVO.

Sustainability work

Our key sustainability areas........ 13

Introduction

Introduction.................................. 2

Setra Group Sustainability Report 2022

Setra’s sustainability work...... 6 We create green value.................. 7 External factors.............................. 8 Setra’s value chain........................ 10 Our sustainability goals................ 11

Climate report

Introduction

Introduction.................................. 2

We work systematically to reduce our own emissions and collaborate with our partners throughout the value chain to achieve the goal of making Setra climate neutral by 2030.

Our contribution to the UN SDGs......................................... 12

Sustainability work

Our key sustainability areas........ 13 Our portfolio................................... 14 Climate-smart raw material......... 17 Resource-efficient business....... 21 Safety, culture and colleagues... 25 Sustainable transport................... 30 Climate report................................ 33

Executive Management............ 38 Board of Directors...................... 39

Sustainability risks..................... 43 GRI content index...................... 45 Contact details............................ 47

“Becoming climate neutral is a big but necessary commitment. In 2022, we learned more about Setra’s potential to reach net zero emissions by 2030. We have identified a number of activities to be prioritised and weighted according to emission size and cost. One of the key issues is how to achieve fossil-free production, as well as how to fully transition to renewable fuels and electrification in the transport sector.

Our roadmap, with its activities, targets and strategy for carbon offsetting, is well on its way to being finalised.

We look forward to implementing it together with our suppliers and partners.”

GRI content index

Governance of Setra’s sustainability work..................... 40

More knowledge on the way forward

Contact details

Melanie Sjögren, Sustainability Director

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Setra Group Sustainability Report 2022

Setra’s sustainability work...... 6 We create green value.................. 7 External factors.............................. 8 Setra’s value chain........................ 10 Our sustainability goals................ 11 Our contribution to the UN SDGs......................................... 12 Our portfolio................................... 14 Climate-smart raw material......... 17 Resource-efficient business....... 21 Safety, culture and colleagues... 25 Sustainable transport................... 30 Climate report................................ 33

Executive Management............ 38 Board of Directors...................... 39

Sustainability risks..................... 43 GRI content index...................... 45 Contact details............................ 47

Governance

Climate calculations in line with the GHG Protocol Setra’s Climate report is prepared in accordance with the international Green­house Gas (GHG) Protocol. The standard divides emissions into three categories, known as scopes, and considers emissions from a life cycle perspective. Scope 1 includes the emissions that occur ‘inside the gates’ at Setra, i.e. emissions from machinery, boilers and vehicles, which account for around 4 percent of total emissions. Scope 2 covers the emissions generated from the production of the energy that Setra purchases. Since Setra has been buying renewable electricity for many years, emissions in Scope 2 are very low, in fact almost zero. Scope 3 includes emissions that occur upstream or downstream from Setra’s operations. The largest emissions occur in this category, at around 96 percent. Upstream emissions include emissions from forestry and the transport of timber, but also emissions from the production of fuels for machinery and the manufacture of other raw materials.

Downstream emissions include emissions from transport to the customer. Emissions from inbound and outbound transport account for around 72 percent of Setra’s total greenhouse gas emissions.

1.4

million tonnes CO2 The amount of carbon dioxide stored as carbon in the wood products Setra sold in 2022 (1.7 million m3).

This sequestration equates to the greenhouse gas emissions of around 180,000 Swedes.

Contact details

The annual Climate report that Setra produces is an important tool for monitoring greenhouse gas emissions, because it shows where in the value chain the emissions occur and how big they are. The Climate report is prepared for the Swedish operations as a whole and for each production unit, providing important data for analysing, prioritising and deciding on emission reduction measures. Some measures are Group-wide, while others concern specific units or depart-

How we work

GRI content index

Governance of Setra’s sustainability work..................... 40

Wood is climate smart. Growing trees capture carbon dioxide from the atmosphere and store it as carbon. The carbon bound up in Setra’s wood products is higher than the carbon dioxide emissions that occur in the processing chain, from forestry, via sawing and further processing to transport to the customer, measured per cubic metre of sawn product.

Setra’s wood products also create climate benefits when they replace building materials with a greater climate impact, such as steel and concrete. The bioproducts from the production, the chips and shavings, become raw material for circular products in the pulp and paper industry and are used to produce renewable energy. Setra’s overall climate objective is to be climate neutral by 2030, excluding international transport.

The Climate report shows that the greatest emissions occur in the transport sector, which is why a transition to climate-smart transport is Setra’s greatest challenge on the road to climate neutrality.

ments. A large proportion of the emissions occur outside of our own operations, which makes them harder to control. However, we can help to reduce emissions by cooperating with and setting requirements for actors in other parts of the value chain, such as timber suppliers and carriers.

Sustainability work

Our key sustainability areas........ 13

Our opportunities and challenges

Introduction

Introduction.................................. 2

34

Setra Group Sustainability Report 2022

Setra’s sustainability work...... 6 We create green value.................. 7 External factors.............................. 8 Setra’s value chain........................ 10 Our sustainability goals................ 11 Our contribution to the UN SDGs......................................... 12 Our portfolio................................... 14 Climate-smart raw material......... 17 Resource-efficient business....... 21 Safety, culture and colleagues... 25 Sustainable transport................... 30 Climate report................................ 33

800

Wood has a positive effect on the climate

influence the content of Setra’s future Climate reports.

■ Carbon dioxide emissions, excl. transport, in kg.

Roadmap to climate neutrality Our goal of climate neutrality by 2030 includes all operations from forest to customer, with the exception of foreign distribution. As we move towards 2030, we will focus on reducing emissions where we have the greatest opportunity to make an impact, i.e. within our own operations, our Swedish timber purchases and domestic transport.

Being climate neutral means that emissions from operations should reach a net sum of zero. At present, emissions from Setra’s operations, excluding foreign distribution, stand at around 80,000 tonnes of carbon dioxide per year.

■ Carbon dioxide emissions, incl. transport, in kg.

■ Amount of carbon bound in wood, converted into CO2.

28

Delivery to Sweden

Delivery to the UK

Delivery to Germany

35

64

88

Delivery to Japan

Wood binds the equivalent of 800 kg of carbon dioxide per cubic metre of sawn timber.

Sustainability work

Our key sustainability areas........ 13

This year’s Climate report features a change in the calculation method, which has resulted in a declaration of higher emissions.

The change is due to the fact that one of Setra’s timber suppliers has expanded its system boundaries and included additional emission sources, which has had a knockon effect on Setra’s climate calculations.

For more information on this, see the GRI content index, disclosure 2-4.

The GHG Protocol is also currently being redeveloped regarding land-intensive activities, including forestry. The new guidance specifies how companies should calculate and report carbon emissions and sequestration related to land use and to carbon storage in biogenic products, such as wood products. This new guidance will

Introduction

Introduction.................................. 2

252 The table shows the sequestration effect (green column) in relation to the carbon emissions generated, from seedling planting to delivery to customers in different countries. For example, using wood from Setra in Sweden helps to lock in 765 kg of carbon dioxide per cubic metre of sawn timber.

Executive Management............ 38 Board of Directors...................... 39

Sustainability risks..................... 43 GRI content index...................... 45 Contact details............................ 47

EMISSION CATEGORIES Setra reports its emissions in accordance with the GHG protocol. The emissions are classified as follows: Scope 1: Direct emissions from the business (fuel combustion at own plants and in company vehicles)

Setra’s climate footprint, 2022*

Scope 3

Tonnes of carbon dioxide Scope 2 Scope 1

Scope 1_________________________ 4%

Scope 3________________________ 96%

Drying and heating __________ 3,781

Fuel and energyrelated activities _______________ 2,905

Machines_______________________ 4,978 Business travel_____________________ 64

Scope 2: Indirect emissions from purchased energy (electricity, district heating, district cooling)

Total_____________________________ 8,822

Scope 3: Indirect emissions from other parts of the value chain, such as purchased transport, travel and the climate footprint of the raw materials.

Scope 2_________________________ 0%

Raw materials_________________ 36,642 Other materials__________________ 7,463 Waste in own operations___________ 23 Commuting and business travel_____________________ 851

Purchased electricity, heating and cooling_______________ 61

Inbound timber deliveries____ 15,909

Total__________________________________ 61

Total, including transport__ 193,240

Transport to customers____ 129,446

Contact details

The calculations include emissions from divested and sold units, as well as from wholly owned new investments. Setra’s full Climate report is available at setragroup.com.

GRI content index

Governance of Setra’s sustainability work..................... 40

* A recalculation has been made, for more information see GRI content index disclosure 2-4.

35

Setra Group Sustainability Report 2022

Setra’s sustainability work...... 6 We create green value.................. 7 External factors.............................. 8 Setra’s value chain........................ 10 Our sustainability goals................ 11 Our contribution to the UN SDGs......................................... 12 Our portfolio................................... 14 Climate-smart raw material......... 17 Resource-efficient business....... 21 Safety, culture and colleagues... 25 Sustainable transport................... 30

The focus has been on emissions in our own operations, Scope 1. Preliminary studies have been conducted to identify measures for achieving the goal of fossil-free production.

The measures identified include electrifying processes and internal transport, increasing the share of renewable fuels in work vehicles and replacing boiler startup fuel with renewable alternatives. The measures for the period up to 2030 will emphasise continuing to work on Scope 1 and reducing emissions in Scope 3. Here, however, Setra has less potential to engender change and we cannot therefore become climate neutral entirely on our own. We are dependent on long-term policy instruments and cooperation throughout the value chain.

Carbon dioxide emissions 2014–2022* Kg CO2/m3 sawn timber, excluding transport to customer 60 50 40 30 20 10 0

2014

2015

2016

2017

2018

2019

2020

2021

2022

Governance of Setra’s sustainability work..................... 40

Total climate footprint 2020–2022*

Sustainability risks..................... 43

Tonnes of carbon dioxide, including transport to customer

Executive Management............ 38

GRI content index...................... 45

208,593

202,123

2020

2021

2022

Contact details............................ 47

Over the past three years, Setra has reduced its total footprint by around 6 percent (13,000 tonnes). Energy efficiency within our own operations and more efficient and greener transport have been and will continue to be important activities for achieving our environmental and climate goals. Our total climate footprint is affected by, among other things, production volumes, the export balance between different markets, and our own and our suppliers’ climate calculations and ambitions.

Contact details

215,039

GRI content index

Board of Directors...................... 39

Since Setra’s first complete Climate report was produced in 2014, total emissions excluding transport to customers have been reduced by more than 45 percent, calculated per cubic metre of sawn timber. Significant measures have included purchasing renewable electricity, making our production more energy efficient and choosing renewable fuels. As we process more of the products, emissions per cubic metre produced will increase slightly.

Climate report................................ 33

Sustainability work

Our key sustainability areas........ 13

About 10 percent comes from our own operations and 90 percent from other parts of the value chain. The aim is to reduce emissions as far as possible in our own operations and in the value chain. As a last resort, when lower emissions cannot be achieved, carbon offsetting may be used.

In 2021, Setra decided a revised goal for the total climate footprint. By 2025, emissions will be reduced by at least 35 percent, corresponding to 82,500 tonnes, compared with the base year 2015.

The outcome in 2022 was approximately 33,500 tonnes and in 2023 emissions are set to be reduced by 5 percent compared with the previous year, equating to 10,100 tonnes.

The roadmap for a climate-neutral Setra by 2030 is currently under development.

Introduction

Introduction.................................. 2

* A recalculation has been made, for more information see GRI content index disclosure 2-4.

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Setra Group Sustainability Report 2022

SPECIFIC ENVIRONMENTAL AND CLIMATE MEASURES

Setra’s sustainability work...... 6

In 2022, several measures were taken to reduce greenhouse gas emissions. Some of these are aimed at reducing emissions in Setra’s value chain, while others involve product development where the benefits accrue to customers in their climate work.

We create green value.................. 7 External factors.............................. 8 Setra’s value chain........................ 10 Our sustainability goals................ 11 Our contribution to the UN SDGs......................................... 12 Our portfolio................................... 14 Climate-smart raw material......... 17 Resource-efficient business....... 21 Safety, culture and colleagues... 25 Sustainable transport................... 30 Climate report................................ 33

Executive Management............ 38 Board of Directors...................... 39

Sustainability risks..................... 43 GRI content index...................... 45 Contact details............................ 47

Circular business models Setra wants to be as resource efficient as possible and is working to increase the degree that our products are processed. We are therefore on the lookout for innovative, future and circular cooperation projects.

In 2023, we will build a pellet production facility in Långshyttan where shavings, wood chips and pieces of wood, i.e. residual streams from production, will be used as raw material. Scaling up the production of pyrolysis oil from sawdust is another option being explored.

Recycled plastic

Increase building in wood Wooden building materials and renewable fuels are important for the construction and property sector’s ability to reach its climate goals. The construction and property sector accounts for around 20 percent of Sweden’s total greenhouse gas emissions, with the greatest emissions coming from the manufacture of building materials and products and from energy use in buildings. By providing Environmental Product Declarations (EPDs) with quality-assured environmental and climate data for our products, Setra can help the construction industry to make climate-smart choices. Setra developed an EPD for cross-laminated timber in 2022, and in 2023 we will update our EPD for glulam. We also make it easier for those who want to build in wood, for example by providing expertise and offering timber frames on a turnkey basis, including assembly.

Setra is helping to increase knowledge about building in wood through various research projects, several of which focus on developing CLT technology, for example by improving structural, fire safety and moisture performance. Important partners in this work are Swedish Wood and Wood City

Sweden, of which Setra has been a member since 2022.

Collaboration with suppliers A large proportion of our greenhouse gas emissions are generated indirectly – when we purchase transport services, for example. We try to influence our carriers by setting requirements and maintaining a close dialogue, and we are finding that many of these companies are also setting their own ambitious climate targets. A key issue

is the choice of fuel by transport operators.

The ability to optimise the load factor and empty running rate and to plan routes also has an impact on Setra’s climate footprint.

We have taken an active decision together with our carriers to continue exploring electrification and alternative renewable fuels for our national transport needs. The effects of climate action by the carriers are visible in Setra’s Climate report. Read more about how we work on this in the Sustainable transport section on page 30.

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Contact details

Setra uses plastic to package wood products before they are sent to the customer.

The plastic protects the wood from rain, UV radiation and other external damage.

Setra has investigated alternative packaging materials, but has not yet found a suitable renewable alternative. Plastic currently accounts for just over 1 percent of Setra’s greenhouse gas emissions. To reduce emis-

sions, we are now in dialogue with suppliers to increase the proportion of recycled plastic in the packaging we use. Plastic packaging and strapping are purchased from suppliers both in and outside Sweden.

We are seeing commitment on the issue of plastics from both our suppliers and our employees.

GRI content index

Governance of Setra’s sustainability work..................... 40

Drying wood is the most energy-intensive process in Setra’s production. In 2022, a decision was made to invest in adaptive control for those dryers that are not yet equipped with the technology. Adaptive control is about optimising the drying process to achieve higher energy efficiency and capacity. This investment decision means that all the dryers in Setra’s operations, almost 100 of them, will be fitted with adaptive control from 2023.

Sustainability work

Our key sustainability areas........ 13

More energy-efficient drying kilns

Introduction

Introduction.................................. 2

Setra Group Sustainability Report 2022

Setra’s sustainability work...... 6 We create green value.................. 7

Executive Management

Introduction

Introduction.................................. 2

External factors.............................. 8 Setra’s value chain........................ 10 Our sustainability goals................ 11

Setra’s organisation

Our contribution to the UN SDGs......................................... 12 Our portfolio................................... 14 Climate-smart raw material......... 17 Resource-efficient business....... 21 Safety, culture and colleagues... 25 Sustainable transport................... 30

Katarina Levin

Olle Berg

Pontus Friberg

President and CEO Born: 1964 Employed since: 2020 Education: MSc Forestry Science

EVP Market and Business Development Born: 1965 Employed since: 2013 Education: MSc Econ.

SVP Enterprise Risk Management Born: 1962 Employed since: 1993 Education: MSc Forestry Science

Sustainability work

Our key sustainability areas........ 13 CEO Finance and Accounts HR and Payroll

IT Risk Management Communication

Climate report................................ 33

Executive Management............ 38 Production and Sustainability

Board of Directors...................... 39

Sustainability risks..................... 43 GRI content index...................... 45 Contact details............................ 47

Market and Business Development

BA Building Solutions and Components

Sustainability

Anders Nordmark

Johanna Gydingsgård

SVP Production and Sustainability Born: 1973 Employed since: 2020 Education: MSc Eng.

EVP Supply Chain and Technology Born: 1961 Employed since: 2017 Education: MSc Eng.

CFO Born: 1974 Employed since: 2018 Education: Master’s in business economics

Lotta Olsson

Daniel Halvarsson

Joakim Nyqvist

CIO Born: 1967 Employed since: 2022 Education: BSc in Wood Technology

EVP Building Solutions and Components Born: 1979 Employed since: 2019 Education: MSc Eng.

SVP HR Born: 1971 Employed since: 2018 Education: BSc in Education

Environment

Contact details

Jonas Gustavsson

GRI content index

Governance of Setra’s sustainability work..................... 40

Supply Chain and Technology

38

Setra Group Sustainability Report 2022

Setra’s sustainability work...... 6 We create green value.................. 7

Board of Directors

Introduction

Introduction.................................. 2

External factors.............................. 8 Setra’s value chain........................ 10 Our sustainability goals................ 11 Our contribution to the UN SDGs......................................... 12 Our portfolio................................... 14 Climate-smart raw material......... 17 Resource-efficient business....... 21 Safety, culture and colleagues... 25 Sustainable transport................... 30 Climate report................................ 33

Executive Management............ 38

Anders Källström

Erik Brandsma

Fredrik Munter

Sven Wird

Lennart Sundén

Charlotte Lindahl

Chairman since January 2020. Director since 2018.

Main occupation: Various board positions, including Chairman of Svensk Travsport.

Born: 1959

Director since May 2022.

Main occupation: CEO Sveaskog.

Member of Remuneration Committee.

Born: 1964

Director since January 2020.

Main occupation: CEO Mellanskog Born: 1974

Director since September 2020.

Main occupation: Various board positions, including Director of Sveaskog AB. Born: 1951

Director since January 2020.

Main occupation: Various board positions, including Director of Mellanskog and Preem AB. Born: 1952

Director since May 2022.

Main occupation: CFO Infranord. Member of the Audit Committee.

Born: 1969

Juha Taavila

Ellinor Berglund

Tomas Larsson

Jonny Treard Andersson

Lennart Berglund

Director since January 2020.

Main occupation: Independent advisor.

Previously several years at Stora Enso Wood Products.

Born: 1956

Employee Representative.

Board Member since 2009.

Main occupation: Customer Service.

Employed since 1989.

Born: 1969

Employee Representative.

Board Member since 2016.

Main occupation: Shift Leader.

Employed since 1989.

Born: 1968

Employee Representative.

Deputy Board Member since 2019.

Main occupation: Operator.

Employed since 2005.

Born: 1963

Employee Representative.

Board Member since 2019.

Main occupation: Forklift Operator.

Employed since 1986.

Born: 1969

Sustainability work

Our key sustainability areas........ 13

Board of Directors...................... 39

GRI content index

Governance of Setra’s sustainability work..................... 40 Sustainability risks..................... 43 GRI content index...................... 45 Contact details............................ 47

Contact details

39

Setra Group Sustainability Report 2022

Setra’s sustainability work...... 6 We create green value.................. 7 External factors.............................. 8 Setra’s value chain........................ 10

Governance of Setra’s sustainability work

Introduction

Introduction.................................. 2

Setra’s aim is for sustainability to be an integral part of everything we do. Our core values of Commitment, Innovation and Responsibility are to serve as our guiding lights in making sustainable decisions and acting ethically in our everyday work.

Our sustainability goals................ 11

Our key sustainability areas........ 13

We conduct materiality analyses as a way to identify our key sustainability issues. The analyses are based both on the impact of the business throughout the value chain and on external demands and expectations, and also take into account sustainability-related risks and opportunities for Setra’s business. The materiality analysis is continuously reviewed and updated as necessary, in line with developments and changes globally and within our own organisation. A comprehensive and wide-ranging update of the materiality analysis, including the stakeholder dialogue, is being conducted in 2022–2023.

The results of the current materiality analysis have been summed up in six key areas: Our portfolio, Resource-efficient operations, Climate report, Safety, culture and colleagues, Climate-smart raw material and Sustainable transport. The sustainability report sets out what we consider important in each area, how we work, goals and follow-up.

Our portfolio................................... 14 Climate-smart raw material......... 17 Resource-efficient business....... 21 Safety, culture and colleagues... 25 Sustainable transport................... 30 Climate report................................ 33

Executive Management............ 38 Board of Directors...................... 39 Governance of Setra’s sustainability work..................... 40 Sustainability risks..................... 43 GRI content index...................... 45 Contact details............................ 47

Stakeholder dialogue

Sustainability policy Setra’s sustainability policy, set by the Board, is the general governing document

for our work on sustainability. The policy clarifies that, along our entire value chain, we are committed to responsible business practices that promote human rights, good

working conditions, environmental consideration and anti-corruption. The policy also describes our approach in each of these areas. Setra’s whistleblowing service for 40

Contact details

Setra’s priority stakeholders are customers, employees, owners and suppliers. We maintain an ongoing dialogue with them through our regular activities and communication channels to understand their requirements and expectations, identify areas for improvement, and find opportunities for collaborative development. A full update of

the stakeholder analysis and stakeholder dialogue on sustainable development is carried out approximately every three years.

The Sustainability Manager is responsible for the dialogue and analysis, with the results then reported to the Executive Management.

They also form part of the annual follow-up of the sustainability strategy by the Board of Directors. Since Setra’s Board is largely made up of our owners, contacts with stakeholders are also made through the owners’ own networks.

In early 2023, an additional stakeholder dialogue with customers and owners, specifically on sustainable development, will be conducted as part of the update of the materiality analysis.

Two areas that continue to grow in importance for our customers and other stakeholders are the origin and climate performance of our products and our work on climate adaptation and mitigation. Issues related to sustainable forestry and the impact on biodiversity have also become increasingly important to more people, while also becoming more prominent in the public debate and in Swedish and EU policy discussions. These are core issues for us, which we are constantly working on together with our owners, suppliers and the industry.

GRI content index

Materiality analysis and prioritised sustainability areas

Sustainability work

Our contribution to the UN SDGs......................................... 12

Setra Group Sustainability Report 2022

Setra’s sustainability work...... 6 We create green value.................. 7 External factors.............................. 8 Setra’s value chain........................ 10 Our sustainability goals................ 11 Our contribution to the UN SDGs......................................... 12

anonymous reporting was introduced in 2022, as required by law, and is now included in the policy. Our focus areas in the policy – business ethics, employees, occupational health and safety, the environment and the climate – are also governed by other policies and instructions. The sustainability policy can be viewed at setragroup.com.

Sustainability work at Setra forms an integral part of our processes and our shared way of working. All employees are required to make a contribution within the framework of their respective roles and responsibilities.

Each manager has a responsibility delegated from the Executive Management or the CEO. Operational work on environmental, ethical, health and safety and employee issues takes place on the ground, out in the respective units and departments.

The SVP Production and Sustainability has overall responsibility for Setra’s sustainability work, while the Sustainability Director has the task of leading, driving and developing the work, providing expertise and supporting the organisation on sustainability-related issues. Responsibility for risk management is delegated from the CEO to the SVP Enterprise Risk Management.

The Sustainability Manager and the SVP Production and Sustainability are responsible for drawing up a plan, strategy and goals for Setra’s work on sustainable development, all of which is then put before the Executive Management. The result is an annual action plan, based on our sustain­ ability policy, which is then approved by the Board of Directors.

Follow-up takes place continuously in connection with reporting on goals and

Climate-smart raw material......... 17 Resource-efficient business....... 21 Safety, culture and colleagues... 25 Sustainable transport................... 30 Climate report................................ 33

Executive Management............ 38 Board of Directors...................... 39 Governance of Setra’s sustainability work..................... 40 Sustainability risks..................... 43 GRI content index...................... 45 Contact details............................ 47

President and CEO

Executive Management

Delegation of operational environmental work to site managers Delegation of health and safety responsibilities to all managers

Production and Sustainability

Sustainability

Cross-functional networks (other departments, site managers and HSE coordinators)

Environment and support function Health and Safety

External audits projects, and through audits of all Setra’s management systems. Annual reporting and follow-up of the sustainability work is carried out for the Board in connection with the CEO’s strategy review. Both the CEO and the Board are also responsible for reviewing and approving the annual sustainability report.

serious accidents. A 95 percent healthy attendance rate among employees.

• Climate-neutral operations by 2030 – on our way to fossil-free production • Increase the level of processing and value added to our products • Attractive employer that sustainably develops internal expertise

Sustainability strategy

Alongside the company’s budget process, we also develop business plans for each department and unit. These business plans include Setra’s process for management by objectives, where we formulate goals for the year based on Group-wide strategic objectives, identify success factors, develop indicators, create action plans and monitor the status of the goals. More detailed information on Setra’s goals can be found in the Sustainability goals and follow-up section.

Based on our overall business objective of being the leading wood products company with the strongest sustainability profile, we have established four strategic objectives that set the direction of work on Setra’s prioritised sustainability areas. Our strategic objectives are: • Good health and high safety – zero vision for workplace accidents and an interim target for 2025 to significantly reduce

Internal and external audits are conducted regularly to ensure that we operate in accordance with our certifications and certified management systems.

This year saw external audits of the environmental management system for the units in Nyby, Långshyttan, Skinnskatteberg and Hemsta/Gävle, as well as head office in Solna. The auditor reports that Setra meets the requirements of the standard and that it conducts forward-looking work, where environmental issues form a natural and integrated part of the company’s overall sustainability work. The audit resulted in only six minor non-compliances and four improvement measures.

Over the year, external audits were also conducted of the work on energy surveys for Färila, Malå and Långshyttan. This resulted in seven minor non-compliances, mainly concerning shortcomings in calculations and data. Root cause analysis and actions 41

Contact details

Our portfolio................................... 14

Board of Directors

All Swedish operations are environmentally certified according to ISO 14001. In addition, the operations in Långshyttan are certified according to ISO 9001. Setra’s management system also includes the management of OHAS and fire safety, and it is checked regularly through internal audits and insurance inspections. These elements have not been externally certified.

Setra’s sawmills and processing units are certified in accordance with FSC® and PEFC Chain of Custody standards and the FSC standard for Controlled Wood. The certification demonstrates that the company has a system in place for tracking the raw wood material and ensuring that it originates from a responsibly managed forest.

GRI content index

Organisation and responsibility

Governance and follow-up of sustainability work

Sustainability work

Our key sustainability areas........ 13

Certified management systems

Introduction

Introduction.................................. 2

Setra Group Sustainability Report 2022

Setra’s sustainability work...... 6 We create green value.................. 7 External factors.............................. 8 Setra’s value chain........................ 10 Our sustainability goals................ 11 Our contribution to the UN SDGs......................................... 12 Our portfolio................................... 14 Climate-smart raw material......... 17 Resource-efficient business....... 21 Safety, culture and colleagues... 25 Sustainable transport................... 30 Climate report................................ 33

Executive Management............ 38 Board of Directors...................... 39

Sustainability risks..................... 43 GRI content index...................... 45 Contact details............................ 47

Permits and legal requirements

Sustainability requirements for suppliers Setra’s Code of Conduct for Suppliers is based on the UN Global Compact’s prin-

ciples for responsible business conduct, plus relevant international conventions. The Code of Conduct covers both suppliers of goods and services and Setra’s other partners, in Sweden and internationally.

The Code of Conduct is included in all new supplier contracts. We are also engaging in a dialogue with existing suppliers to get them to sign up to the Code. To identify high-risk suppliers from a sustainability perspective, we have analysed all suppliers with an annual purchase value of at least SEK 1 million. The risk analysis considers the country, industry, product category and supplier category. New suppliers are subject to sustainability assessments if the risk analysis indicates that the business or product is a high risk.

In our largest and most important purchasing categories, timber and transport, as well as in certain other categories where

high risks have been identified, there is a continuous focus on setting and monitoring requirements and on dialogue for closer cooperation. See also the sections on Climate-smart raw material (page 19) and Sustainable transport (page 31). As of 2020, Setra only buys wood raw material from suppliers certified according to FSC® or PEFC. During the year, an independent supplier audit was conducted in cooperation with SCA at a factory in China that manufactures plastic wrap. The factory is owned by an American company and is ISO certified for environment, quality and health and safety. The audit mainly checked that the workplace complied with local laws and regulations. Four major non-compliances were identified concerning health and safety. Setra and SCA will jointly follow up on measures and any new non-compliances

until all the non-compliances have been dealt with and signed off.

Risk management and sustainability risks Setra has an Enterprise Risk Management (ERM) process in place to prevent and manage risks identified within the business and its stakeholders. Read more about this in Setra’s Annual Report under Risk management and factors affecting performance.

Responsibility for risk management ultimately lies with the company’s SVP Enterprise Risk Management, who is a member of the Executive Management. A summary of the company’s risks related to sustainability is presented on page 43. These are primarily operational risks within a timeframe of 1–3 years. Financial risks and market risks are dealt with in the overarching company risk process, but are not reported here.

42

Contact details

All Setra’s production units are obliged to hold permits or to submit reports under the Environmental Code. The principal sources of environmental impact from our production are energy utilisation and noise.

No non-compliances or penalties related to the environmental permits were reported in 2022.

Several of Setra’s production units have previously worked with wood impregnation and/or used various wood preservatives that may have resulted in soil pollution. Some other processes and activities may also have contributed to pollution. In addition, there are around 15 identified sites where the Group has had operations in the past. The environmental authorities have requested an investigation and, in certain cases, subsequent remediation measures at some of these sites. With other requirements possible going forward, Setra has set aside funds to cover any future remediation measures.

GRI content index

Governance of Setra’s sustainability work..................... 40

have been reported in January 2023.

Internal and external audits have also been carried out on management systems for FSC® and PEFC-certified wood raw material. External audits were carried out at the units in Skinnskatteberg, Heby and at head office. The audits revealed that the traceability requirement is well integrated into our everyday operations, and that we have sound processes and organisational structures in place. Only a few minor noncompliances need to be addressed.

Sustainability work

Our key sustainability areas........ 13

Introduction

Introduction.................................. 2

Setra Group Sustainability Report 2022

Setra’s sustainability work...... 6 We create green value.................. 7 External factors.............................. 8 Setra’s value chain........................ 10 Our sustainability goals................ 11 Our contribution to the UN SDGs......................................... 12 Our portfolio................................... 14

Setra’s work on sustainability risks involves identifying, managing and following up on risk mitigation measures.

The risks are evaluated every year. The main potential risks are listed below.

■ Potentially high risk ■ Medium risk ■ Low risk Risk management

Fire

We operate in an industry with a risk of fire, but we conduct internal systematic fire safety work that is audited and reviewed every year.

Setra conducts preventive and systematic fire safety work, which includes: General risk management instructions with continuous follow-up and updating Annual risk and insurance inspections by unit once a year, plus follow-up and action plans Reporting risk observations and near misses with an emphasis on fire Fire safety installations to limit fire spread and damage, e.g. alarms and sprinklers Regular training in flammable goods, hot work, fire risks, etc.

Annual internal audits

OHAS health risks

At the start of the year, the pandemic involved an OHAS-related health risk for our employees, especially those who work in production or, for one reason or another, are unable to work remotely. Accidents at work are also a health risk for our employees, see Workplace accidents.

Setra’s Executive Management, Executive Assistant and Head of Communications make up the crisis management team. During the pandemic, the crisis management team met continuously via digital meetings. The team follows the advice and guidelines of the Public Health Agency of Sweden in the first instance. Risk analyses and action plans have been developed. Information and guidelines are communicated via the intranet to all of Setra’s employees. In 2022, Setra implemented the Employee Pulse survey, where every two months we measure the status of issues regarding the organisational and social work environment (Clarity, Efficiency, Inclusion, Value, Balance, Respect) in the organisation.

The annual employee appraisal is another forum where social work environment issues are discussed. In order to manage any related ill health, the company has a solid partnership with Ljung & Sjöberg, who are experts in concealed mental illness. All employees are encouraged to call them, anonymously if they wish, if they feel worried about themselves, a colleague or someone in their circle. In addition to the services of Ljung & Sjöberg, Setra also offers occupational healthcare to all employees.

Risk category

Description of risk

Risk management

Workplace accidents

We work in an industry where there is a risk of injuries, such as falls, pinching, slips, etc., due to non-compliance with procedures and/or negligence.

Setra works systematically on OHAS issues internally, with a strong emphasis on safety, and applies a documented OHAS management system.

Work and measures to ensure a safe working environment include: Review of accident status at briefings, presentation of LTAs (Lost Time Accidents), including actions and improvements, at management team meetings Risk, accident and near miss reporting in SIA, plus root cause reporting of accidents Safety briefings and increased communication Safety committee meetings and safety inspections in production and processing units Working on machine safety, risk assessment and CE marking.

Perimeter protection such as barriers and safety guards Training in OHAS issues for all managers and employees

Bribery and corruption

This risk primarily applies in the context of relations with customers and suppliers. Setra has relations all over the world, which makes this risk difficult to check and monitor.

Setra takes a zero tolerance approach to bribery and corruption. The preventive work in this area includes: Guidelines for compliance with competition legislation, as well as regarding gifts, benefits and third-party hospitality A control function on the signing of significant contracts Training and dilemma exercises for staff who have working relationships with customers/suppliers The Code of Conduct for Suppliers includes requirements to combat corruption Whistleblowing function implemented for anonymous reporting – goes first to external resource

Climate-smart raw material......... 17 Resource-efficient business....... 21 Safety, culture and colleagues... 25 Sustainable transport................... 30 Climate report................................ 33

Executive Management............ 38 Board of Directors...................... 39 Governance of Setra’s sustainability work..................... 40 Sustainability risks..................... 43 GRI content index...................... 45 Contact details............................ 47

Sustainability risks continued → 43

Contact details

Description of risk

GRI content index

Risk category

Sustainability work

Our key sustainability areas........ 13

Sustainability risks

Introduction

Introduction.................................. 2

Setra Group Sustainability Report 2022

Setra’s sustainability work...... 6

Introduction

Introduction.................................. 2

■ Potentially high risk ■ Medium risk ■ Low risk Description of risk

Risk management

EU forest strategy, biofuel regulations and restrictions, Land Sector and Removals Guidance and EU Taxonomy

There is currently a major debate in the EU about how forestry should be conducted in individual countries, how sustainable forestry should be defined and the use of wood as an energy source. Risk that new policies and regulations will limit and complicate opportunities to use forest raw material to heat buildings and as biofuel for the transport sector. There is also some uncertainty regarding the new addition to the GHG Protocol, in terms of how land-intensive activities should report their greenhouse gas emissions.

Ongoing and active dialogue with industry organisations, owners and suppliers.

Monitoring EU and Swedish policies, directives, guidelines and regulations and adapting accordingly.

Keeping track of research and knowledge development in the sector to make best use of wood raw material.

Disseminating knowledge about wood and its sustainability and how it can make a major contribution to the green transition.

Quality shortfalls in responsible forestry

The risk of non-compliance with legislation and certification requirements in forestry.

Our operations are FSC® & PEFC-certified. Our management system for FSC/PEFC is reviewed annually by internal and external auditors.

As of 2020, Setra only purchases wood raw material from suppliers who are FCS or PEFC-certified. All the timber we purchase is traceable and fulfils our requirements for controlled wood raw material. We maintain a continuous dialogue with owners and suppliers to safeguard the process. The purpose of the audit includes ensuring that Setra’s work with FSC/PEFC is managed in accordance with the requirements, dealing with non-compliances and contributing to improvements.

Natural disasters, impacts of climate change

Increased risk of storms, forest fires and insect attacks that may affect the reliability of timber deliveries to our units and require us to be prepared to take care of damaged wood.

Examples of activities include: Working with raw material suppliers to minimise the consequences of climate-related damage to forests.

Planning and contingency measures to deal with storm-felled, fire damaged and insect damaged wood – through increased opportunities to water timber stocks, for example.

Taking account of location, flood risk and soil conditions when setting up new operations.

We are investing in rail infrastructure to facilitate the handling and transport of timber

Governance of Setra’s sustainability work..................... 40

Risk category

Description of risk

Risk management

Sustainability risks..................... 43

Non-compliance with environmental and OHAS laws and regulations

We have systematic working practices, but there is always a risk of incidents due to unforeseen events, human error, external circumstances, etc.

Setra works systematically to improve and safeguard its operations, supported by our ISO 14001-certified management system and internal health and safety work. Examples of activities include: Establishing and following up on environmental targets Procedures/instructions Internal and external audits with management of non-compliances and improvement measures Monitoring legislation, reviewing and disseminating changes and implementation of new legislation Risk, insurance and environmental liability inspections Maintenance of plants Dialogue with public authorities Supervision and monitoring

Setra runs operations in Sweden and the UK; our biggest suppliers are Swedish, and Sweden has strict legislation.

Human rights risks are primarily to be found in the supply chain, more specifically within certain sectors. The EU’s draft legislation on business and human rights is also on the way.

Setra has clear policies and guidelines on equality and non-discrimination, gender equality, recruitment and pay. Equivalent requirements are set for suppliers through Setra’s code of conduct. Separate requirements on risk reporting apply in the UK. The Modern Slavery Act came into effect in 2015, requiring all companies with operations in the UK to report risks and risk management measures with regard to forced labour and trafficking in the supply chain. Examples of measures to protect human rights include: Requiring FSC and PEFC certification, which includes human rights, labour rights etc. in the auditing process. Setra will produce a declaration/policy on areas related to this in 2023.

Supplier assessments and requirements, Code of Conduct for Suppliers Dialogue with employees, underpinned by Employee Pulse surveys, employee appraisals and feedback meetings Labour rights training for managers We monitor proposed EU law via industry associations to prepare for any new requirements and reporting rules

We create green value.................. 7 External factors.............................. 8 Setra’s value chain........................ 10 Our sustainability goals................ 11 Our contribution to the UN SDGs......................................... 12 Our key sustainability areas........ 13

Sustainability work

Risk category

Our portfolio................................... 14 Climate-smart raw material......... 17 Resource-efficient business....... 21 Safety, culture and colleagues... 25 Sustainable transport................... 30 Climate report................................ 33

Executive Management............ 38 Board of Directors...................... 39

Contact details............................ 47

Unplanned emissions to the soil, air and/or water Soil pollution

Human rights breaches

GRI content index

GRI content index...................... 45

Contact details

44

Setra Group Sustainability Report 2022

Setra’s sustainability work...... 6 We create green value.................. 7 External factors.............................. 8

GRI content index

GRI 1 used: Foundation 2021 No applicable sector-specific standard.

Location 48–100 refers to Setra's Annual and Sustainability report.

Setra Group has reported in accordance with the GRI Standards for the period 1 January–31 December 2022.

Introduction

Introduction.................................. 2

Setra’s value chain........................ 10 Our sustainability goals................ 11

GRI Standard and disclosure

Our contribution to the UN SDGs......................................... 12

2: General disclosures 2021

General disclosures cont.

GRI 201: Economic performance 2016

Omission/comment

GRI Standard and disclosure

Location

Omission/comment

2-16 Communication of critical concerns

28–29, 40–42, 52

Number of critical cases is not reported, no aggregate data available.

Comprehensive data on the Board’s sustainability expertise is not avaliable.

1, 3

Climate-smart raw material......... 17

46

2-17 Collective knowledge of the highest governance body

39, 98

2-2 Entities included in the organisation’s sustainability report

Resource-efficient business....... 21

45, 46, 47

2-18 Evaluation of the performance of the highest governance body

98

2-3 Reporting period, frequency and contact point 2-4 Restatements of information

35–36

2-19 Remuneration policies

75–76, 97–99

2-20 Process to determine remuneration

98–99

2-21 Annual total compensation ratio

76

2-22 Statement on sustainable development strategy

5

2-23 Policy commitments

7, 40–42

2-24 Embedding policy commitments

42–44

2-25 Processes to remediate negative impacts

10, 14, 20, 22, 26–29, 31, 34–36, 41–42, 52–53

Safety, culture and colleagues... 25 Sustainable transport................... 30 Climate report................................ 33

Executive Management............ 38 Board of Directors...................... 39

Comment: For this year’s sustainability report, a new calculation of Scope 3 emissions for 2020 and 2021 has been carried out to improve the comparability of emissions in 2020–2022. The new calculations use updated emission factors for inbound timber deliveries, where the 2022 reduction obligation has been taken into account (resulting in an approximate doubling of emissions from inbound deliveries), and for m3 solid under bark (this factor includes activities related to forest production), where new emission factors have become available as a result of increased data availability in the supply chain. The new emission factors are twice what they were for previous years so, after adjustment, the Scope 3 emissions for 2020 and 2021 are higher than before.

Governance of Setra’s sustainability work..................... 40

2-5 External assurance

46, 100

Sustainability risks..................... 43

2-6 Activities, value chain and other business relationships

3, 10, 13, 15–16, 18–20

2-26 Mechanisms for seeking advice and raising concerns

7, 26–29, 40–41

GRI content index...................... 45

2-7 Employees

3, 26–29

2-27 Compliance with laws and regulations

41

2-28 Membership associations

16, 32, 37

2-29 Approach to stakeholder engagement

42

2-30 Collective bargaining

29

Contact details............................ 47

2-8 Workers who are not employees

29

2-9 Governance structure and composition

38–39, 97

2-10 Nomination and election to the highest governance body

97

2-11 Chair of the highest governance body

39, 97

2-12 Role of the highest governance body in overseeing the management of impacts

41

GRI content index

2-1 Organisation details

Our portfolio................................... 14

Sustainability work

Our key sustainability areas........ 13

Location

No non-compliances

Material topics GRI 3: Material topics 2021 40 13, 40

2-13 Delegation of responsibility for managing impacts

41

3-2 List of material topics

2-14 Role of the highest governance body in sustainability reporting

41

GRI 201: Economic performance 2016

2-15 Conflicts of interest

99

3-3 Management of material topics

50–53

201-1 Direct economic value generated and distributed

4

GRI content index continues → 45

Contact details

3-1 Process to determine material topics

Setra Group Sustainability Report 2022

GRI Standard and disclosure

Setra’s sustainability work...... 6

Material topics cont.

Material topics cont.

We create green value.................. 7

GRI 205: Anti-corruption 2016

28

External factors.............................. 8

3-3 Management of material topics

26, 29, 40–42, 43

403-4 Worker participation, consultation and communication on occupational health and safety 403-5 Worker training on occupational health and safety

26–28

205-2 Communication and training about anticorruption policies and procedures

9, 40–41

403-6 Promotion of worker health

28

403-7 Prevention and mitigation of occupational health and safety impacts directly linked by business relationships

26–28

Setra’s value chain........................ 10 Our sustainability goals................ 11 Our contribution to the UN SDGs......................................... 12 Our portfolio................................... 14 Climate-smart raw material......... 17 Resource-efficient business....... 21 Safety, culture and colleagues... 25 Sustainable transport................... 30 Climate report................................ 33

Executive Management............ 38 Board of Directors...................... 39

No confirmed incidents

GRI 301: Materials 2016 3-3 Management of material topics

18, 22

301-1 Materials used by weight or volume

18

Comment: Setra’s disclosures relate to wood raw material

22–23

302-1 Energy consumption within the organisation

22–23

302-4 Reduction of energy consumption

22–24

GRI 303: Emissions 2016 3-3 Management of material topics

33–37

305-1 Direct (Scope 1) GHG emissions

35

305-2 Energy indirect (Scope 2) GHG emissions

35

305-3 Other indirect (Scope 3) GHG emissions

35

305-4 GHG emissions intensity

36

GRI content index...................... 45

22, 42, 44 Comment: No non-compliances in 2022.

GRI 308: Supplier environmental assessment 2016

Contact details............................ 47

3-3 Management of material topics

100% 27

18–20, 42, 44

308-1 New suppliers that were screened using environmental criteria

3-3 Management of material topics

26, 29

404-3 Percentage of employees receiving regular performance and career development reviews

26, 27

About the report This publication constitutes the Setra Group’s consolidated Sustainability Report for the 2022 financial year. In the absence of any statement to the contrary, the Sustainability Report covers the entire Setra Group. To ensure transparent and relevant reporting of work on sustainability, Setra applies the GRI Standards 2021. We have also adapted the content of our Annual Report to the requirements of the Swedish Annual Accounts Act on sustainability reporting.

GRI 307: Environmental compliance 2016

307-1 Non-compliance with environmental laws and regulations

403-9 Work-related injuries

Omission/comment

GRI 404: Training and education 2016

3-3 Management of material topics

3-3 Management of material topics

Location

403-8 Workers covered by an occupational health and safety management system

GRI 302: Energy 2016

Sustainability risks..................... 43

GRI Standard and disclosure

The calculation of how many Swedes’ greenhouse gas emissions the carbon sequestration equates to, page 34, uses data from the Swedish Environmental Protection Agency regarding consumption-based greenhouse gas emissions (7.7 tonnes per person per year).

The calculation of how many apartments the supplied bioenergy equates to, page 18, uses statistics from the Swedish Energy Agency (2021) regarding energy use for heating and hot water per square metre (132 kWh/ square metre) and Statistics Sweden’s figures for the most common apartment size (67 square metres, 1 bedroom).

The auditors’ statement on the statutory Sustainability Report is on page 100 of Setra’s Annual and Sustainability Report. The Sustainability Report has not been the subject of additional external audits. Setra also publishes an annual Climate report, which documents our emissions and the climate footprint of our products. The annual Climate report is drawn up based on the guidelines of the GHG Protocol and is published in full at setragroup.com.

GRI content index

Governance of Setra’s sustainability work..................... 40

205-3 Confirmed incidents of corruption and actions taken

Omission/comment

Sustainability work

Our key sustainability areas........ 13

Location

Introduction

Introduction.................................. 2

Comment: We have not procured or signed contracts with any major suppliers that have any significant impacts.

GRI 403: Occupational Health and Safety 2018 26–28

403-1 Occupational health and safety management system

26–29, 41

403-2 Hazard identification, risk assessment and incident investigation

26–28

403-3 Occupational health services

28

Comment: All employees are offered occupational healthcare and are expected to participate in rehabilitation.

Sensitive personal information data protected against unauthorised access.

Contact details

3-3 Management of material topics

Setra supports the children’s rights organisation Bris for one year, starting in October 2022. The donation will specifically help to fund the work of the Bris national helpline. Setra has also donated money to the Red Cross to support Ukraine during Russia’s war of aggression. On two occasions, Setra’s employees organised their own fundraising for Ukraine through UNHCR. The company then matched what they raised.

46

Setra Group Sustainability Report 2022

Setra’s sustainability work...... 6 We create green value.................. 7

Contact details

Introduction

Introduction.................................. 2

External factors.............................. 8 Setra’s value chain........................ 10 Our sustainability goals................ 11 Our contribution to the UN SDGs......................................... 12 Our portfolio................................... 14 Climate-smart raw material......... 17 Resource-efficient business....... 21 Safety, culture and colleagues... 25

Setra Group AB Box 3027 SE-169 03 Solna Street address: Gårdsvägen 18 169 70 Solna Phone: +46 8 705 03 00 E-mail: info@setragroup.com

Sustainable transport................... 30 Climate report................................ 33

More contact details can be found at setragroup.com

Executive Management............ 38 Board of Directors...................... 39

Sales, Customer Service & Logistics Wood Products Setra Trävaror AB Box 223 SE-801 04 Gävle

Street and delivery address Setra Trävaror AB Skolgången 13 SE-802 57 Gävle

Building Solutions and Components Setra Långshyttan Amungsvägen 17 SE-776 72 Långshyttan

Telesales and Customer Service +46 8 705 03 00

Sustainability risks..................... 43 GRI content index...................... 45

Get in touch!

Contact details............................ 47

Sawmills Setra Färila

Edevägen SE-695 85 Hasselfors Phone: +46 585 485 00

Setra Heby Claes Wikströms väg 3 SE-744 32 Heby Phone: +46 224 368 00

Setra Kastet Box 430 SE-801 05 Gävle Phone: +46 26 54 80 00

Setra Malå Storgatan 92 SE-939 32 Malå Phone: +46 953 414 00

Would you like more information about our sustainability measures or this report? Feel free to contact us.

Nybyvägen 8 SE-743 63 Björklinge Phone: +46 18 56 08 00

Johanna Gydingsgård

Setra Skinnskatteberg

Sustainability Director melanie.sjogren@setragroup.com +46 8 705 03 15

UK

China

Setra Långshyttan

Setra Wood Products Ltd 11, St. Mary’s Court North Bar Within Beverley, East Yorkshire HU17 8DG, United Kingdom Phone: +44 1482 870 035

Setra Wood (Guangzhou) Co Room 2720, Teem Tower No 208 Tianhe Road, Tianhe District, CN-Guangzhou 510 620 Phone: +86 20 2830 6431

Poland

Setra Group c/o Mehdi Daldoul Rue du Lac Leman, Immeuble Regency, Bureau 301 Les Berges du Lac 1053 Tunis, Tunisia Phone: +216 71 861 700

Setra Building Solutions and Components

Hagabergsvägen 3 SE-776 72 Långshyttan Phone: +46 225 635 00

Setra Wood Products Ltd Estuary Road King’s Lynn Norfolk PE30 2HJ, United Kingdom Phone: +44 1553 760 071

Setra Polska Sp. z o.o. ul. Bankowa 2 PL 84-242 Luzino Poland Phone: +48 784 300 450

Spain Setra Sales Spain C/Colombia 63, 4 B ES-28016 Madrid Phone: +34 91 353 39 20

Tunisia

Japan Setra Sales Japan 4th floor, 32 Shiba-Koen Building 4-30, Shibakoen 3-chome Minato-ku JP-Tokyo 105-0011 Phone: +81 3 5404 7560

Box 100 SE-739 22 Skinnskatteberg Phone: +46 222 452 00 Production: Setra Group AB in partnership with LeadContent and Trossa.

Photos: Hasse Bengtsson (Johnér), Morgan Ekner, Michael Engman (Swedish Forest Industries Federation), Per Eriksson, Malin Grönborg, Tomas Hajek, Swedish Wood/Fredrik Hjerling, Ola Högberg, Jansin & Hammarling, Kerstin Jonsson (Swedish Forest Industries Federation), Christian Ljung, Klas Sjöberg.

47

Contact details

Melanie Sjögren

Processing units

Snasbäcken Setra Glulam SE-827 63 Färila Amungsvägen 17 Phone: +46 651 76 81 00 SE-776 72 Långshyttan Phone: +46 225 635 00 Setra Hasselfors

Setra Nyby

CFO johanna.gydingsgard@setragroup.com +46 8 705 03 03

Sales offices outside Sweden

GRI content index

Governance of Setra’s sustainability work..................... 40

Production units

Sustainability work

Our key sustainability areas........ 13

Head Office